Meet Loyal, our latest addition to our Shopify app portfolio. Loyal is a valuable yet straightforward app to give you precious insights into your customers.
Based on their purchase history, it will automatically split them into six segments using the RFM analysis (Recency, Frequency, and Monetary). And then provide you with marketing tips on how to treat each customer segment and what sort of campaign you should present them.
The single goal of using Loyal is increasing your customer retention or the number of returning customers, in other words.
What's RFM Analysis
RFM stands for Recency, Frequency, and Monetary value. In the world of e-commerce, they mean the following:
- Recency – The time passed since the customer has made his last order in your store
- Frequency – The total number of purchases made by the particular customer
- Monetary Value – Total cumulated spend of the specific customer in your store
Using these three metrics, the Loyal app will divide customers into six different groups:
- New – First-time buyers on your store. Usually, the most significant customer segment in newer stores.
- About to Sleep – Customers who don't buy often and haven't made any orders recently. Usually, the most significant customer segment in active stores.
- Sleepers – Customers made their last purchase a long time ago and have a low number of total orders. Most likely, they are lost.
- Potential Loyal – Customers who bought recently and have the potential to become loyal
- Loyal – Your most precious customers who are returning frequently
- Loyal at Risk – Past loyal customers who haven't been active recently
The point is to approach each customer group differently and with different marketing campaigns to maximize their revenue impact.
For example, if someone is (potential) loyal, it probably doesn't make sense to offer them a discount. Instead, show them what's new in your store or what products they need based on their historical purchases.
On the other hand, discounts work pretty well on the "lost" customers (sleepers) who haven't purchased anything in a long time.
Why You Should Focus on Retention
Nowadays, many store owners typically focus on the acquisition side of their business. Running ads, optimizing them, testing different variants, and so on. But not many store owners are paying attention to the retention side.
And that's a total shame! Your existing customers are much more likely to buy again from you, it's much cheaper to retain them, and they tend to spend 31% more vs. the new customers. Getting a new customer is 7x more expensive than retaining an existing one.
By default, the Shopify platform doesn't offer you many retention tools or analytic reports. The only available information is returning customer rate. Loyal gives you valuable insights into your customer base and tips on how to improve your retention.
Loyal App Features
- Automatically analyze your order history and create six customer groups using an RFM analysis (i.e., how frequently and recently they bought something)
- Monitor important retention metrics like number of customers, customer lifetime value, orders per customer, and average order value
- Tag your customers based on their group
- CSV exports for popular campaign tools (Facebook, Google, Klaviyo)
- Tips and recommendations on how to approach each customer group
As of now, the app is provided entirely for free with no limits. We plan to add more advanced features as part of the premium plan in the near future.