Imagine for a moment that you’re a busy Londoner. You’ve finished a tough day at work. You arrive at the bus stop to go home. The traffic is heavy…

Which bus do you think will arrive next? (Clue: it’s not yours!)

Probably:

1. The bus line that showed up most recently (maybe even two of them!)

2. The bus line that shows up the most frequently

3. The bus that people spend the most time on

‘RFM’ stands for recency, frequency and money. It’s a universal direct marketing principle that also applies to anything that happens on a semi-regular basis.

Every pub landlord knows that the most likely person to step into the pub next is going to be the last person who left. Followed by the person who steps into the pub most frequently. Followed by the person who spends the most money in the pub overall. (I’ve rigorously tested that example).

The next person to call you will most likely be the person who called you last. Followed by the person who calls you most frequently. Followed by the person who spends the most time on the phone with you overall.

RFM is at work in your marketing too. The most likely person to subscribe to your emails is the one looking at your website right now. Followed by the person who visits most frequently, followed by the person who spends the most time on your site. All three may be the same person.

In email marketing terms, the most likely person to buy is the person who opened and clicked the most recently, followed by the person who has clicked the most, followed by the person who spends the most time reading. Again, all three could be the same person.

In monetary terms, the most important contact on your list is the person who bought the most recently, even if they bought something small like a book. (Recency being the biggest indicator of future purchase intent.) The next most important is the person who has bought the most often. The next is the person who has spent the most with you overall.

So, the person who spent £5 with you this morning is more deserving of your attention than the person who spent £100,000 5 years ago. Trajectory matters more than historical behaviour.

It’s fairly simple to measure RFM in your email marketing system. If you use a tag-based system, whenever people click on a link you want to apply a tag called ‘Start Recently Clicked’. That tag then needs to start an automation where the following tags are applied:

‘Clicked in last 7 days’

‘Clicked in last 30 days’

‘Clicked in last 60 days’

‘Clicked in last 90 days’

‘Clicked in last 120 days’

As time elapses you knock off the tags one by one. So after 7 days, if they haven’t clicked again you remove the ‘Clicked in last 7 days’ tag. (If they click again the automation needs to restart at day 0.)

After 120 days you can apply a tag called ‘Not clicked in 120 days’, which suppresses the contact from ongoing emails and marks them for review. You only want to be emailing people who engage with your emails from time to time.

You can do a similar thing with frequency. Whenever someone clicks on a link, apply another tag called ‘Start Frequency Counter’. That tag then needs to run an automation to increment a number field by 1. (The custom field could just be called ‘Links Clicked’.) Most tag-based email marketing platforms will let you run a calculation on a custom field.

Based on these two things you can then create a custom segment of your list that has:

– Clicked in the last 7 days

– Clicked above a certain threshold (e.g. they’ve clicked more than 5 times)

Those are the people you send expensive ‘bulky mail’ packages to. Those are the people you send Christmas gifts. Those are the people you call from time to time. These are the people you should try to meet in person.

You don’t need to spend a fortune marketing to everyone. You can sift and sort your database to highlight the most promising prospects.

All of this assumes you are sending emails on at least a semi-regular basis. If you only email people once a month, or when you have a sale, the system above won’t work.

If you’re emailing regularly, then when you do have a sale you can offer it first to contacts with the highest RFM score. They’re your VIPs. Give them first pick or add an extra incentive.

Effective storytelling has to sit within a marketing follow-up system, so RFM is always at work. Once you’ve seen RFM at work, it’s hard to stop seeing it everywhere!

Thanks for nerding out with me 🙂

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About the author 

Rob Drummond

Rob is the founder of StorySelling.biz.

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