The report organizes customers into both retention and activity segments. Retention segments help businesses measure retention behavior while activity segments measure customer activity levels at a glance. There are a variety of ways to use this data. For example:
To find the number of retained customers in a period of time, simply select your desired date range and filter to the retention segment you'd like to see, for example, “Retained”.
If you’d like to contact customers before they are “Lost”, select your desired date range, filter to the Retention Segment “Lapsing” and use that list to re-engage with the “lapsing” customers.
To find the proportion of customers in each Retention Segment, select your desired date, export the report, and analyze the number of customers in each segment which is most easily done in a pivot table.
The report is sorted by ‘Last Check-In’ date in descending order with the most recent check-ins at the top and includes customers who have had at least one check-in during the date range selected.
*Note: There are certain customers NOT included in the report:
Staff/employees
Removed or merged customers
Customers who have not made a check-in:
- ‘Dormant’ customers who created an account over 3 months ago but have not had a check-in
- New customers who created an account within 3 months and have not yet had a check-in
- To find customers who are new or dormant, go to the Customers report and filter to the relevant date range. Then dedupe the customers list with the corresponding list from the Customer Retention - Details report.
In the event a customer has check-ins but their RFM scores do not align with a Retention Segment, their Retention Segment will be null and won’t appear in the report. For example. a customer with one year of history and the following scores will NOT appear in the report:
- RFM Scores: 4,2,2
- Recency Score = 4; Bob has a check-in in the last 20-30 days
- Frequency Score = 2; Bob has been to the brand 3-13 times
- Monetary Score = 2; Bob has spent $175 - $350
What are RFM Scores?
To better understand customer retention, Mariana Tek leverages the concept of RFM Scores. RFM Scores (Recency, Frequency, and Monetary Value) are calculated on a scale of 1 to 5 for each category and customer using their last year of business history. 1 being the lowest possible score and 5 being the best possible score in a category. The RFM model attaches these scores to each customer measuring the value each customer brings to a business. The model then breaks these customers out into Retention and Activity segments.
Recency Score (RScore): a measurement of a customer’s recency to a business. The RScore is determined as the number of ‘days since the last check-in.’ Average recency is a RScore of 3 which equates to a check-in recency of 30 to 40 days.
RValue = Days Since Last Check In
- ex. 3 Days Since Last Check In= 3 → Recency Score: 5
- If a customer has 0 check-ins or orders → default: RECENCY SCORE = 0. They will appear in the report as they have 0 check-ins.
Recency Score Scale
Frequency Score (FScore): a measure of a customer’s frequency at a business for the last year. The FScore is determined as the number of check-ins and orders in the year with an applied normalization factor (for customers with less than 1 year of history). Because frequency takes both check-ins and orders into account, in determining the FScore, check-ins have a weight of 0.85 and orders a weight of 0.15. Average frequency is a FScore of 3 which equates to a customer having 13 to 23 check-ins/orders across the year - effectively 1 - 2 check-ins/orders a month.
FValue = 0.85 * # of Checkins in 1 year * (1 year normalization factor) + 0.15 * # of Orders in 1 year * (1 year normalization factor) → Frequency Score
ex. 0.85 * 64 checkins (365/365) + 0.15 * 10 orders (365/365) = 55.9 → Frequency Score: 5
If customer has 0 check-ins or orders → FREQUENCY SCORE = 0
Frequency Score Scale
Monetary Score (MScore): a measure of a customer’s spend for the last year. Monetary spend is inclusive of all orders (classes, apparel, food and beverage, etc). Average monetary spend is a MScore of 3 which equates to $350 to $525 of spending in a year.
MValue = Total spend in 1 year
ex. $485 total spend in 1 year → Monetary Score: 3
If customer spent $0 → default: MONETARY SCORE = 0
Monetary Score Scale
What are Retention Segments?
Retention Segments are a measurement of all three RFM scores which classifies customers into different retention segments.
What are activity segments?
Activity Segment: A measurement of a customer’s ‘activity’ at a glance — the sum of the FScore and MScore; by summing the frequency level and the monetary value level of a customer, we can define activity buckets to help understand customers varying levels of activity:
* Beginner activity segment applies only to customers with 1 or 2 total check-ins all time; once a customer has a 3rd check-in transition to the appropriate activity segment ‘At Risk’
Filters (columns affected):
Active Locations - only the locations the employee has access to will be shown
Retention Segment - options are: ‘New’, ‘Newly Retained’, ‘Retained’, ‘Third-Party Retained’, ‘Lapsing’, ‘Lost’, ‘Dormant’
Activity Segment - options are: ‘Champion’, ‘Loyal’, ‘Valuable’, ‘Beginner’, ‘At Risk’
How do I locate Customers who have never checked in to a class?
Customers who have never checked into a class will not appear in the Customer Retention - Details report but they will appear in the Customers report. The Customers report now has Retention and Activity segments for all customers. You can also filter down by the Retention and Activity segment. To find ‘New’ customers without a check-in, set the date filter to be the last 3 months and set the Retention Segment filter to ‘New.’ If you are looking for ‘Dormant’ customers (no check-ins and created an account over 3 months ago), set the date filter to be past the last 3 months and set the Retention Segment filter to ‘Dormant.’