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For many businesses, not enough time is spent on marketing and all too often a ‘catch all’ approach is taken with mail shots and campaigns being sent to every customer. However, this can result in low response and conversion rates. Effective marketing stems from a more focussed and targeted approach, concentrating efforts on customers or customer groups that are the most profitable to your business. In this respect, ‘Recency, Frequency, Monetary’ or RFM profiling can be a powerful tool.
RFM is a framework which quantifies customer behaviour and allows for behaviour based customer segmentation by grouping customers depending on their transaction history – how recently did they buy, how often do they buy and how much did they buy. The RFM model attributes scores to each of the three elements and these scores are combined to provide a total score which is then used to grade and/or group customers.
Using such a model means businesses can easily highlight their most profitable customers, better understand their behaviour, and then focus their marketing efforts through more targeted campaigns. Instead of always reaching out to 100% of an audience, identifying and targeting only the specific customers or customer groups that are the most profitable to your business will generate higher conversions, satisfaction and customer lifetime value.
What’s more, RFM profiling can also be of use to Sales Reps and Account Managers in negotiations, as decisions on discount levels for example might be influenced by a customer’s RFM score and grade. If a customer buys big and buys often, you may wish to be more flexible on terms and discounts. Therefore, ensuring staff are armed with this information is absolutely key.
OrderWise already provides a wealth of features to manage customer relationships, run marketing campaigns and drill down into business intelligence data. Now this month sees the incorporation of powerful RFM profiling which will enhance and focus sales and marketing activity.
In the latest version of OrderWise, users can set up appropriate scoring and grading rules for the three elements of RFM, with scores weighted to provide grades that are most appropriate for your business. For example, you may particularly value regular purchases and so the ‘frequency’ element can be weighted higher than the ‘recency’ and ‘monetary’ elements.
A scheduled service task will take the rules and apply them to the customer base and the produced score and grade will be pulled through to customer records. This provides clear visibility and ease of access to the enhanced customer information gained through RFM profiling, allowing your sales, marketing and customer service staff to be more effective. From a marketing perspective, queries can be run to produce lists of customers with specific grades to be targeted in particular marketing campaigns.
This new addition will assist businesses in improving their sales and marketing efforts based on an established model that helps businesses to better understand their customer base, increase loyalty and promote greater customer engagement. What’s more utilising RFM helps to reduce costs and improve ROI through optimised targeting and more effective use of staff resources.
Combined with the extensive range of existing OrderWise functionality provided by the CRM, Marketing, Business Intelligence and BI Alerts modules, businesses have powerful marketing and business analytics tools at their disposal which will help to enhance customer relationships and dramatically improve conversion rates.
Existing users can contact our Customer Success team, and to discuss your requirements in more detail please call 01522 704083.
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