RFM Model: Increase your conversion rates by 30%

There are two types of people.

Ones who follow everything they see on the internet.

Others who innovate.

Make the systems better.

Adapt their marketing strategies to each brand.

The former has no substance.

They don't adapt.

Every SaaS is the same for them.

The latter transforms.

Each SaaS is a new challenge.

They understand audiences.

What worked for one SaaS isn't meant to work for another.

Here is where the RFM model comes to play.

Customer Lifecycle

The concept of lifecycle is very important.

All the customers in your SaaS goes through a lifecycle.

You want to convert more users?

Understand exactly where they are in their lifecycle.

Segment them accordingly and send them the correspondent personalized emails.

RFM Model

To put each user in their lifecycle bucket we use the RFM model.

Which stands for:

Recency, frequency and monetary value.

Frequency is on the Y-axis.

Recency is on the X-axis.

Recency is the timeframe since last purchase.

If your SaaS works on credits (It would be the timeframe from last credit purchase)

Someone who is new has high potential.

They can still buy many of your products, upgrade their plan...

A person who has been around for a long time won't be as much.

If they haven't bought, they are less likely to do so.

Obviously, a good campaign can make them change their minds.

The frequency is how much they have purchased.

A first time-purchaser is low value.

Someone who has purchased a lot is high value.

They are more likely to buy.

Why I'm telling you all this?

Here is how you can take advantage of this:

• Identify the whales. Expand them (Upsell their team)
• Increase the average sale per client (Expansion flows)
• Increase the frequency of purchases.

What do I want to get with this?

Not all SaaS businesses need the same flows.

Some may benefit more from inactivity flows.

Others from App-usage flows.

Examples

Are you running a subscription SaaS or a one time payment one?

For the subscription you may need to setup more onboarding flows, nurture your users and try to expand them.

On the other hand.

If you are working on a one time payment.

It might be wiser to upsell them new products.

Not focusing that much your campaigns or flows on making the user upgrade their plan.

Is your user buying a lot?

Make them buy more.

Offer discounts if they onboard a team member.

Overall.

You want to identify where your customer is in their journey.

Taking that into account, work on their flows.

Not each user has to go through the same emails.

That's the power of segmentation.