If you’re looking for a more strategic way to segment your list and understand your customers better, you should always start with RFM Analysis. RFM stands for Recency, Frequency, Monetary — and the order of the letters is definitely significant to the process. Here’s a quick introduction and overview to RFM and how it can help you improve your marketing and grow your business.

Why Should You Use RFM Analysis?
The future of marketing has already arrived, and it’s called “Behavioral Response Marketing.” In a nutshell, this type of marketing involves triggers based on what your prospects and customers do (or don’t do) while subscribed to your list. RFM analysis is the best place to begin if you want to upgrade your email marketing (and your offline marketing) because it’s the most logical way to segment your list based on clear, proven metrics.

Why Should You Segment Your List?
In the beginning, your marketing can be as simple as capturing leads and then following up with those leads. But as your business matures, you need to become much more sophisticated. That starts with list segmentation.

In order to segment your list, you’ll need marketing software to make the process easier. For small businesses, I recommend (and I use) Infusionsoft. They offer the best CRM + Email Marketing system out there for small businesses.

With a tool like Infusionsoft, you can easily segment your list by using Tags to segment your contacts based on behavior. RFM is really just a top-level way of measuring behavior. Here’s how to segment your list using RFM…

Recency
The first item on the RFM list is Recency. Make no mistake, Recency is the single best way to predict which of your contacts will become your next customer. In other words, if you want to know who your best customers are TODAY, simply look at who has performed a positive action RECENTLY (yesterday, the last 7 days, the last 30 days, etc).

Recent actions could be: opened an email, clicked an email link, purchased a product, watched a video, responded on social media, etc. Obviously not all “recent” behaviors are equal, but most of them are worth measuring. The key for you is to determine which RECENT behaviors tend to generate the most subsequent purchases.

When looking at recency, you’re basically asking the question “What have you done for me lately?” Think about it — if you’re in a romantic relationship with someone, this question is most important of all. Maybe you did something nice 6 months ago, but it’s doing something nice today, yesterday, or within this week that really counts.

Frequency
Next on our RFM list is Frequency. After measuring recency, we want to know how Frequently your prospects and customers have taken action. This will be the second-best metric for determining who your best customers will be. Maybe it’s been 30 days since you clicked an email, but if you’ve clicked over 50 emails in the last year, that’s a worthwhile thing to know.

Again, it’s important to separate frequency from recency. I hope the reason is obvious — the customer/prospect who has clicked 50 emails within the last year is not as likely to make another purchase as the customer or prospect who clicked 5 emails in the last week.

When looking at Frequency, you’re asking “How often have you done something for me?” This one is still very important and takes a strong second place on our list.

Monetary
Finally, we come to Monetary. Believe it or not, “total money spent” is third place in RFM analysis. Although a customer may have spent thousands of dollars with you, if those purchases are not recent AND not frequent, you’re not as likely to make another upcoming sale with that individual.

Here you are asking the question, “How much money have you spent on me?”

It can be hard for us business owners and entrepreneurs to accept that “total dollars spent” is not necessarily going to give us a list of our best customers UNLESS that metric also comes with Recency and Frequency of purchase or action.

RFM Analysis In A Nutshell
So there you have it. RFM analysis is really a lot easier to implement in your business than you might realize. If you’re using a tool like Infusionsoft, you can start by exporting your list and then segmenting by Recency, then by Frequency, and then by Monetary values. Give each contact a score in those 3 categories and then total the 3 scores to segment your list across the board.

Even if you just start by applying “Recency” by itself, you can learn a lot about your list and at least get some segmentation benefits.

If you’re not already using Infusionsoft, I highly recommend you check them out here.

What questions do you have about RFM analysis? Leave your comment below.

1. The average Twitter user follows at least 5 businesses or brands.
2. 80% of active Twitter users access the platform via mobile apps.
3. 36% of online Americans aged between 18 and 29 are regular Twitter users.
4. As of September 2017, there were 328 million active Twitter users worldwide.
5. 8% of American companies use Twitter for marketing purposes.
6. Twitter ad engagements rose a full 99% between 2016 and 2017.
7. 500 million internet users visit Twitter monthly without logging in to an account.
8. Twitter brand engagement is 17% higher on weekends, but only 19% of brands tweet on weekends.If Twitter were a country, it would be the 12th most populated country in the world.
9. If Twitter were a country, it would be the 12th most populated country in the world.
10. 82% of active users actively engage with brands using Twitter.

I personally use and recommend Infusionsoft. If you’re a regular reader of this blog, you’re well aware of all my Infusionsoft blog posts. Just to be clear and upfront, I don’t work for Infusionsoft but I am a referral partner for them and I do earn commission anytime I refer someone their way. Infusionsoft is one of the very few web marketing software tools I heartily recommend because I honestly and sincerely believe it has the power & potential to transform a small business. But that doesn’t mean it’s all “peaches & cream.” Here are 7 things you should know about Infusionsoft before you take the plunge…

1. It’s much more than just email marketing.
This is by far the greatest misconception about Infusionsoft. Email Marketing is definitely one of its strong suits, but Infusionsoft does A LOT more than just send out emails. It’s a fully functioning all-in-one CRM (customer relationship management) tool. If you’re not familiar with CRMs, you should read this overview. I mention this point because I see 2 types of mistakes being made with the misconception that Infusionsoft is just an email marketing tool: (1) people who don’t fully understand what they’re getting into when they buy Infusionsoft and (2) people who don’t get the big picture of Content Marketing.

2. It’s most appropriate for small business.
If you’re a huge corporation, you should just hire a team of programmers to build a custom system for you. But if you’re a small business, you need something that’s a bit more cookie-cutter at a much lower pricing tier. This is the major advantage of Infusionsoft — you’re buying into a system that thousands of other people are using so you don’t have to pay for (or manage) your own custom system. Now, there are drawbacks to this of course but that’s the nature of software.

3. It has a steep learning curve.
Speaking of drawbacks, this is probably the biggest complaint I hear from fellow Infusionsoft users. It truly is a complex, powerful, sophisticated machine. That means if you learn how to harness its power, you can do amazing things for your marketing and for your bottom-line. But that also means you need to invest time, energy, & patience to learn how to use it. If you’re not willing to invest the time to learn how to use it yourself, you need to invest the money to pay someone who can do that for you. Those are the only two options.

4. It has bugs, quirks, & issues.
Like all software out there, Infusionsoft is not bug-free or error-free. Believe me, I pull my hair out sometimes when I see that a marketing campaign that once was published is suddenly not published, etc etc. But I will say that Infusionsoft is constantly tweaking & updating their systems to improve it. Just about every month or two, they’re rolling out new updates. What more can you expect from such a complex piece of software?

5. It’s not the only marketing tool you’ll need.
Read that again: It’s NOT the only marketing tool you’ll need. If you expect to drive your entire business with only Infusionsoft, you’re kidding yourself. We live in the age of software and technology. You’re going to have to roll up your sleeves and learn how to use a wide range of tools besides Infusionsoft. Be open & willing to learn, and you’ll have no trouble with this reality. Resist it and you’ll surely be lost at sea. Again, all of this boils down to money & time. If you don’t have the money to pay someone to setup & manage all of these tools for you, you need to invest the time to learn how to use them yourself.

6. It’s not cheap (but actually it is).
To get started with Infusionsoft, you’ll need to pay about $200-$300+ per month AND an initial fee of about $2000 (check out full Infusionsoft pricing here). Some people are devastated when I reveal the pricing details. A monthly bill of that size can be a tough pill for a young small business to swallow, but we’re talking about investing in an entire CRM Marketing Automation system here. The golden rule is you should be investing about 30% of your profits into marketing. Even if we stretch that thin down to just 10%, I’m sure your business is making $3000 in profits right? If not, you’re definitely not ready for Infusionsoft anyway.

7. It’s not the Wizard Of Oz.
I met a fellow Infusionsoft user once who made a comment to me about how he expected Infusionsoft to “just make it happen” for him. He was immensely frustrated by the fact that it seemed like so many other people were using the software and getting so much out of it but, as he put it, “it just isn’t working for me and I don’t understand why.” My response to him summed it all up in one go: “Well it’s not the Wizard of Oz.” You shouldn’t expect it to be a wizard for you either. That is, until you’ve invested the time & energy to make it work the way it should. 🙂

1. Snapchat’s percentage of daily reach to the 18­34 demographic is 41%.
2. 71% of Snapchat users are under 35 years old.
3. 54% of Snapchat users log in to the platform every day.
4. 81% of college students using Snapchat do so most frequently during the late afternoon into the night.
5. 178 million people are daily average Snapchat users.
6. Snapchat ads are viewed up to a million times in a single day.
7. Snapchat is growing more popular with American teens than Facebook, with 19% claiming Snapchat is the more important platform.
8. Snapchat has grown to have more active users than Twitter or Pinterest.
9. 70% of snapchat users are female.
10. Snapchat’s video views have grown to overtake that of Facebook.

1. Almost 1/3 of all people on the internet use YouTube.
2. On average, a user will spend 40 minutes on YouTube using a mobile device each day.
3. 300 hours of video are uploaded to YouTube every minute.
4. Over 500 million hours of video are watched on YouTube every day.
5. YouTube has 1.5 billion logged in monthly users each month.
6. YouTube was available in 88 countries and 76 languages as of 2017.
7. Advertisers don’t have to have video inventory to advertise on YouTube.
8. 40% of total YouTube views come from mobile devices.
9. YouTube reaches more 18 to 49 year olds than any US cable network.
10. More than 88 countries have their own local version of YouTube.

Marketing is the single most impactful thing you can do for your business. I’ve yet to meet a business that can’t be improved (or even saved) by a good marketing campaign. So if marketing is so powerful, what could possibly have an even greater impact on your business and your bottom-line? The answer of course is AUTOMATED marketing. Here’s why…

Follow-up, Follow-up, Follow-up
When you automate your marketing campaigns, you implement an automatic system to do one of the most important jobs in your business — following up with your prospects & customers. Today, a large part of Web Marketing consists of simply staying “in front of” your list. With automated marketing systems, you can sit back & relax while your marketing machines do the tough work of emailing, mailing, texting, and even calling your list.

I once heard the CEO of Infusionsoft Clate Mask say that he believed so much in follow-up as a marketing principle that he actually wanted those two powerful words engraved on his tombstone. It really is that critical and that game-changing.

Build, Automate, Test, & Improve
Marketing Automation definitely handles the all-too-important task of follow-up, but it also allows you to remove the human element so you can accurately and thoroughly TEST and improve your results.

Think about it: When you have an automated marketing campaign in place — let’s use a sequence of emails as an example — you can reliably put ALL of your contacts through the same funnel. Then, you can observe the results, tweak, and improve.

Without some form of Marketing Automation, it’s very difficult to gauge the effectiveness of your marketing since you never do it quite the same way twice if a human being is actually running the step-by-step operation.

How To Automate Your Marketing
A full “how to” on Marketing Automation is out of the scope of this post, but I wanted to touch upon it briefly in case you’re completely new to this idea. There are lots of ways to automate your online marketing but the approach I recommend is to start with a powerful piece of software like Infusionsoft. You can also create very basic automated marketing using tools like Aweber or MailChimp but for the very best long-term results, Infusionsoft is the absolute best.

Automating your marketing funnels is a process you’ll never truly finish, but you can start by building a handful of key marketing campaigns. I recommend the following:

1. Initial Marketing Sequence
-You need something to put ALL new prospects through before moving onto specific campaigns. This “initial sequence” should offer lots of value, education, and information and THEN go for that first important sale.

2. Targeted Product Or Service Sequences
-Then you can begin building specific campaigns for specific products & services. These campaigns should trigger only for the targeted contacts on your list.

3. On Going Follow Up Sequences
-You should also have marketing sequences that are much more long-term and on-going with the sole purpose of staying in front of your list.

These are just a few ideas to get you started. What other questions do you have about Marketing Automation? Please leave your comment below.