Marketing folk often say your past customers are your best leads for the future. Then there is countless advice on warming up prospects, qualifying leads, and farming your market. You can very quickly get to the point where you have lists overflowing with names .

This is all very well, but what happens when you collect all this data and don’t know what to do with it?

After you collect your data, you need to start mining it.

A very simple technique that all CRM tools, and even an access database or spreadsheet, can perform is an RFM analysis. RFM stands for Recency, Frequency and Monetary Value.

• Recency - How long ago did they last buy/interact?
• Frequency - How often do they buy/interact?
• Money - How much do they spend? What is their budget?

Take your list and sort by each, giving a score from 1-5. When you have sorted and got three scores, add them together. This will give you a ranking from best (15), to worst (3).

For example,

Mr Big Co buys every week to the value of $1,000.
He is a much better prospect than Mr Flint who bought one $10 product last year.

If you take your top 20% from the list they are your gold customers or prospects. Now you know who to target with your most lavish attention!

Posted in Miscellaneous