RFM Segmentation

Segment your audience based on users' engagement level

Watch this video from our Customer Success team to learn how to use RFM Segmentation in Pushwoosh.

Overview

With RFM (Recency, Frequency, Monetary) Segmentation, you can segment your users based on their engagement level and target these segments with the most tailored communications.

RFM segmentation ranks your users from the most loyal ones to those who are churning and builds a segment for each category of users in your Pushwoosh account. The segmentation is based on two metrics:

• Recency – how recently users performed a specific event;

• Frequency – how frequently they performed that event.

To learn more about Pushwoosh Events, refer to the guide.

In addition, Average Monetary Values (AVM) are calculated for each segment to consider when tailoring your communication strategies. The AVM is the average spend for each user in the segment, being that money, time, or any other countable metric.

You can also use RF segmentation where the Monetary attribute is not taken into account. To do this, select the event but do not specify the Monetary attribute value. The segment will be calculated based on Recency and Frequency only.

How this works

Go to the RFM Segmentation section of your Control Panel and select the Purchase Event and the Monetary Attribute (optionally). Click Calculate.

When you specify an event, we determine how recently and frequently each user of your app triggered that event and score them from 1 to 5 where 5 are the most recent and frequent event performers.

If you want to build an RFM segment, make sure the event you choose has any countable attribute (of Integer or Price type).

If you want to build an RF segment without the Monetary attribute, you can choose any event, whether it has a countable attribute or not. In this case, select "none" as the value of the Monetary attribute.

Thus, all users are divided into 10 segments:

• Champions – The most active users with the highest recency and frequency scores.

• Loyal customers – Users with the highest frequency of event performance with strong recency scores.

• Potential loyalists – Users who have performed the selected event very recently and have the potential to become loyalists or champions.

• New customers – Most recent users with low frequency scores. Strong candidates to encourage repeat use.

• Promising – Users with high recency scores and the potential to become high frequency users.

• Needing attention – Users with above average frequency and recency scores.

• About to sleep – Users with below average recency and frequency scores. May slip away if not engaged with.

• At risk – Users who have above average frequency but low recency scores. Strong candidates to re-engage.

• Cannot lose them – These users were active at one point in your app but haven't performed the event recently. Strong candidates to re-engage.

• Hibernating – Users with the lowest recency and frequency scores. May be lost.

RFM Segments

The RFM segments, once calculated, are displayed in a grid of 10 sections with the number of users in each segment, a percentage of the whole userbase this segment has, and the Average Monetary value of this segment (if you specified the monetary attribute before calculating the segment). On second and further calculations, the rate of growth is shown next to the percentage of the whole audience.

Just click on the segment in the RFM grid to start composing a push message to this audience, or select that segment wherever you start messaging.

Leverage the RFM segments to improve your customer engagement and retention rates: keep in touch with your champions and loyalists, adjust your communication strategies to those at risk, and track the results! For example, set up the Customer Journey for the About To sleep and At Risk segments, build strong re-engaging communication, and recalculate the segments after a while – you'll definitely see a decrease in those audience groups and an increase in loyal ones.

You do not need to manually add RFM segments to the Segments list. Once created, they are automatically available there and can be applied wherever segment-based targeting is used, such as Audience-based entry in Customer Journey.

RFM segments do not update automatically; they need to be calculated first in the RFM Segmentation tab to maintain accuracy.

Before launching a journey with an RFM segment:

-Navigate to Audience > RFM Segmentation and calculate the segment.

-For recurring journeys, ensure to recalculate the segment before each launch to include new users.

For instance, suppose you want to initiate a journey based on the RFM segment Champions, which reactivates every Monday. Start by calculating the segment and launching the journey with it. Before every Monday relaunch, remember to recalculate the segment in the RFM segments tab. This step ensures that new users meeting the segment criteria will be added to your journey.

RFM Tags

For each metric used for calculation, the corresponding tag is created in your account: PW Recency, PW Frequency, PW Monetary). You can use these tags to build your own segments in any combination.

These tags are reset any time you recalculate the segments; that means, each time you start the RFM segmentation calculating, the segments are updated based on the latest data on users' behavior.