Segmentation by customer lifetime value (LTV)

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Contents

1. Customers with a high lifetime value
2. RFM segment: inactive customers with one or two high-value orders
3. A common mistake when filtering by total order revenue

Important!

This article describes the upgraded segmentation interface. Instructions for the previous interface remain available for users working with segments created in the old editor.

See Creating a new segment in the previous interface.

Customers with a high lifetime value

This segment uses customer lifetime value (LTV) to select customers whose total purchase amount exceeds a configured threshold. Specific service terms, personalised offers and extended loyalty programmes can be configured for these customers.

RFM segment: inactive customers with one or two high-value orders

RFM stands for Recency, Frequency and Monetary value. This segment identifies customers who meet all of the following conditions:

• They placed between one and two orders between 13 and 24 months ago.
• The combined amount of those orders is between 10,000 and 24,999 in the system currency.
• The orders have statuses in the completed or delivered status groups.
• They have not placed new orders in the past year.
• They have an email address and an active subscription to email campaigns.
• The condition tree includes an Orders — Not exists group with an order creation date from one year ago to today.

Use an aggregate filter for total order revenue to calculate the amount. It sums the customer's revenue from orders that meet the date, store and status conditions.

The segment can be used in reactivation campaigns for valuable but inactive customers: they previously generated significant revenue but have not made a purchase for some time.

Note

This example combines an aggregate filter for total order revenue with RFM indicators: how recently the customer ordered, how often they ordered and how much they spent. For a simpler selection based on total revenue, use the high-LTV segment described above.

A common mistake when filtering by total order revenue

Using an individual order amount filter inside the condition group instead of an aggregate filter for total order revenue checks order amounts separately. It does not add the amounts of all matching orders together.

For example, a customer has two completed orders for 3,000 and 9,000 in the system currency, giving a combined amount of 12,000. A condition requiring an individual order amount between 10,000 and 24,999 will not include this customer, even though their total revenue for the period exceeds 10,000.

In this incorrect configuration, the group containing the order creation date uses an individual order amount condition instead of the aggregate condition for total order revenue.

Note

To segment customers by total revenue over a period, use an aggregate filter for total order revenue. Use an individual order amount filter when selecting orders with a particular amount.