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From the Little Stream Software blog
Some customers you want to lose.
The always-returns customers.
The "I want to talk to your manager" customers.
The discount-required customers.
The your-own-personal-hell ones.
Customer retention isn't about trying to keep all customers though. It's about keeping the best customers for your Shopify store. The key is, you get to define what best customers means to you.
Defining that is important though. If you don't, then everyone's the best. So no one's the best. There's no participation medals with customer segmenting.
Your best customer definition could be as simple as: customers who buy more than once.
Simple, but surprisingly effective.
Or your definition could be complex: customers who spend more than the trailing 12-month AOV, who have bought within 18 months, and have referred or shared our store with one other customer.
My advice, the more complex you make it, the more difficult it is to explain to others and keep track of. Start with something simple and update it as you grow.
- <500 customers ordering per year: customers who buy more than once
- 500-2,000 per year: customers who buy more than once and have bought within the last 2 years
- 2,000+: lean into a basic RFM using Recency and Frequency scores of 4 or 5
Once each of your best customer segments is more than 10,000 customers (somewhere around 30k-50k customers ordering per year), now pull out the full RFM model and consider drilling down into individual score intersections.
Don't feel you have to graduate out of a level either. You can get great results using a simpler definition even at larger scales. That's why the customer grading in my app works well with even huge Shopify stores.
Eric Davis
