Author: Semsee HQ
Recency, frequency, and monetization (RFM) scoring is a technique commonly used in marketing and customer segmentation to identify and target customers with the highest potential value. Here are some ways you can apply RFM scoring to find the ideal small insurance customer:
- Recency: Recency refers to the time since a customer's last interaction or purchase. It helps identify customers who have recently engaged with your insurance services. A customer who has recently interacted with your agency is more likely to be receptive to offers and more engaged with your brand. For example, you can assign a higher score to customers who have purchased insurance or made inquiries within the last three months.
Frequency: Frequency measures how often a customer engages with your insurance agency. It helps identify customers who have a higher level of interest and loyalty. Customers who frequently purchase insurance or engage with your services demonstrate an ongoing need for coverage and represent a valuable segment. Assign higher scores to customers who have made multiple purchases or interacted with your company on a regular basis.
Monetization: Monetization scoring evaluates the value generated by each customer, typically in terms of revenue or profitability. It helps identify customers who have generated higher financial returns for your insurance company. Assign higher scores to customers who have purchased higher premium policies, opted for add-ons, or generated substantial revenue through other insurance-related activities.
By combining these three factors, you can create an RFM score that ranks customers based on their recency, frequency, and monetization levels. The higher the RFM score, the more valuable the customer is likely to be to your insurance agency. You can then focus your marketing efforts on customers with higher RFM scores, tailoring your offers, and communication to their specific needs and preferences.
It's important to note that while RFM scoring provides a useful framework, it's also beneficial to consider other factors such as demographics, customer preferences, and potential for future growth. Utilizing RFM scores in combination with additional data can help you identify and target the ideal small insurance customer effectively.