RetentionGrid provides you with an easy-to-understand lifecycle segmentation analysis that reveals customer loyalty at a glance. The seven colored areas on The Grid help you understand how to think about and communicate with customers in one or the other area. Open your RetentionGrid while reviewing this tutorial to get the best understanding of how it applies to your data.
If you look at your Grid, you’ll see that the segmented areas are based on recency (the horizontal axis showing days since the last order) and frequency (the vertical axis showing total orders). Using these two coordinates, your customer are plotted on The Grid.
New customers appear in the purple segment after they place a first order. After 31 days, the customer moves into the yellow Drifting area if they did not place a second order yet. Whenever a customer places a next order, they jump to the right of The Grid as pictured in the illustration below.
The names and the color codes of each segment convey positive or potentially negative meaning with regards to the customer lifecycle status. Most importantly, they help you to quickly understand the best way to communicate in terms of tone and topic.
Let’s break it down segment by segment:
New (purple) - These are customers who ordered once in the last thirty days. Begin building a solid relationship during this time. Don’t start selling again immediately — take steps to create a positive connection with your brand. Say thank you, share your story, and remind them of any special care or usage instructions. Maybe offer a small discount on a next order as a welcome gift.
Promising (blue) - These customers ordered two to three times in the last sixty days. They are really starting to like you and your products. Invite them to join your social sites. Ask them to give reviews for products they ordered. Offer free shipping on a next order but don’t be too liberal with discounts -- these customers are likely to come back without one.
Loyal (green) - These customers ordered four or more times and most recently in the last ninety days. They represent high level sustainable value. Protect them. Let them be the first to know about exciting news and give them early access to special new products. Include them in a loyalty rewards program. Ask them to refer friends, and ask them for advice on the products they would like you to develop and offer next. If you see that Loyal customers are drifting past 30 days since last order, check in and find out if they are still satisfied with everything.
Drifting (yellow) - These customers ordered one to three times in the last 31-90 days. The lower volume of orders combined with the longer time since last order means that they are becoming less likely to order from you again unless you can entice them back. Exclusive offers or time limited discounts are often successful with winning back Drifting customers.
Sleepers (brown) - These customers placed one to three orders and most recently more than ninety-one days ago. They are the least engaged, and the hardest to win back. They were costly to acquire, and their total spending is probably not paying off that investment. Be persistent with this segment. Send emails with bold subject lines and irresistible offers to command attention.
At-Risk (orange)- These customers were Loyal and have placed four or more orders, but not since a long time (91-365 days ago) and it looks like you are losing them. It is important to reach out and learn what happened. Perhaps send a survey or make a phone call. You can also try to bring them back by revitalizing their interest with an awesome brand story, or tell them about the end-of-season products that they probably missed.
Red-Alert (red) - These customers were Loyal and have placed four or more orders, but that was over a year ago. You should definitely try to get them to respond to a marketing campaign, but understand that it’s possible they had a bad experience. Maybe they’ve gone to a competitor. Personal outreach is critical to learn reasons for leaving so that you can identify lurking problems or market trend