Meet Ben Chocolat, fifth-generation chocolatier, and purveyor of Louis’ Haut Chocolat, fine Belgian chocolates.   Three years into the business, Louis knows his customers really well and sees common trends.

• There’s Sophia – a self-described diehard chocoholic. Sophia views Louis’ Haut Chocolat as an essential food group and orders Ben’s chocolates every month through his automatic “Chocoholic” monthly program. Sophia is a successful luxury realtor and always includes Ben’s chocolates in her “welcome home” gift baskets or “thanks for your business “ baskets for her clients. She also loves to send Louis’ Haut Chocolat to friends and family for special occasions. Sophia buys regularly and spends at least $5000 every month.
• When Ben got a phone call from the NHL for 5000 personalized packages for their gala awards night, he was over the moon. The NHL told Ben if they received good feedback from the gala, they would place at least one large order per year. The NHL has only bought once, but they spent $250,000.
• Among Ben’s customers are family and friends like Natalie and Alan, who like to treat themselves to a small box of truffles every month. Louis knows they enjoy gifting family and friends with Louis Haut Chocolat, and he can always count on them to buy one box of truffles for Christmas and Easter. Natalie and Alan buy recently and often, however since they are on a budget, they don’t ever spend more than $40 per transaction
• Lastly, he has a couple of large businesses who threw lavish Christmas parties and spent over $10,000 per order for two years; however, since COVID, he hasn’t heard from either of them.

The overview of customer behaviour Ben has noted has a marketing term called The RFM Value Matrix, an acronym for Recency, Frequency, and Monetary Value. With this behavioural system, he can create, analyze, estimate, and assign a numerical value from lowest to highest for each customer. With this system, he can reasonably predict which customers will buy his chocolates in the future and on who or where he should focus his attention.

The RFM Customer Value Matrix:

According to the RFM Customer Value Matrix;

“A” Customers – are the shoppers who earn the highest score in each of the recency, frequency, and monetary value categories. Sophia would definitely qualify as Louis’ “A” customer.

“B” Customers – these are the customers who may have only bought Louis’ chocolates once but spent a lot. For Louis', The NHL is his “B” customer.

“C” Customers – are the lowest spending group who regularly transact, such as Natalie and Alain, who are steady, loyal clients on a budget.

“D” Customers – these customers bought frequently and spent a lot, but they haven’t bought anything from Louis' since the start of COVID.

Ben decides to segment his customer list into three categories with four tiers each;

Louis discovers 64 recognizable customer segments.

Communicating Effectively with Each Segment

Louis knows from experience that each of his four types of clients responds to a unique type of communication. He knows all customers don’t want to hear about all offers all the time. If he marketed the smaller, less expensive items to Sophia, she would be insulted. Similarly, if he tried to market the Chocoholic program to Natalie and Alain, they would probably drop off thinking they can’t afford that type of monthly expense. Likewise, a monthly membership to the NHL does not fit with their needs or buying pattern. So, the next step for Louis is to choose the type of tailored communication he will send to each group, based on their historical behavioural patterns.

This is how Louis decides to communicate with each customer segment;

“A” Customers – Louis gears his communication towards making Sophia and others like her feel valued and appreciated. Since Sophia accounts for a high percentage of Louis’ business, he wants to ensure he keeps her happy and exceeds her expectations. He knows he will need to continually analyze Sophia’s preferences and her customers’ preferences to provide more personalized messaging and custom monthly membership packages.

“B” Customers – Louis wants to treat this segment with kid gloves and nurture them along their path. His messaging will make them feel special and valued and offer them tantalizing incentives to continue doing business with him.

“C” Customers – Louis appreciates his repeat low spending customers and will tailor his communication to let them know he values their business while rewarding them with special offers and incentives to increase their spending.

“D” Customers – Louis’ communication will involve reassessing their current needs to discover how to best communicate with them so that they will re-engage with his business.

RFM is an excellent tool to predict customer behaviour based on past customer behaviour; however, ongoing communication is needed to indicate future activities and preferences accurately.

The RFM Customer Value Matrix is an excellent tool to show which customer segment revenue comes from so that you can focus your efforts on keeping the top revenue generating clients happy. An RFM analysis also indicates “whether a person who buys twice every six months might be better than a person who only bought once in three months. The most recent, the most frequent and the people who spent the most money are always at the top of the food chain. That is the basic concept”. (source: Kurtz, Brian, Overdeliver, USA, Hay House, 2019). An RFM analysis shows commonalities and differences between new and repeat customers and identifies gaps in the customer journey.

What if you’re struggling with your customer profile? BRENT’s Right Fit Match helps you articulate what you sell and who buys your product. We’ll support you in developing your detailed customer profile, focusing on their pain points and the unique solution you provide. From there, we identify opportunities that make buying your product the next logical step for your customer and incorporate their preferences into our automated system so that you have a customer for life.

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