Luca Fontani’s Post

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Founder @ Grapefox | Partner @ Italian Artisan

👚 How to discount for your #fashion brand to maximize profits and minimize risks Most brands I work with initially offer sitewide discounts when it comes to sales. But what if there was a better method that allowed you to: - Maximize profit by offering tiered discounts based on purchasing signals; - Clear unsold stock to raise capital; - Avoid offering discounts to those who would have bought anyway, thus preserving profit. Enter RFM Segmentation, a powerful method that helps you tailor discount strategies by analyzing three key customer behaviors: - Recency (R): How recently a customer made a purchase. Recent buyers are more likely to respond to promotions. - Frequency (F): How often a customer makes a purchase. Frequent buyers are more engaged and loyal. - Monetary (M): How much a customer spends. High spenders are valuable and may need special attention. Here's a common scenario that backfires: offering a 30% discount to a top customer who already spends a lot and frequently. This customer doesn't need a big discount to buy again, so you just lost 30% in profit. By scoring customers on these three dimensions, you can segment them into specific groups and target each with the right discount offers. Here’s how it works: - Top Performers: High Recency, High Frequency, High Monetary. Offer exclusive perks or early access to new collections to maintain loyalty without cutting margins. - Loyal Customers: High Frequency, Moderate Recency, Moderate Monetary. Use moderate discounts or loyalty rewards to keep them engaged. - Big Spenders: High Monetary, Moderate Frequency, Moderate Recency. Offer special incentives or personalized experiences rather than large discounts. - Promising Customers: Moderate Recency, Moderate Frequency, High Monetary. Use small, targeted promotions to encourage more frequent purchases. - At-Risk Customers: Low Recency, High Frequency, High Monetary. Use compelling, well-timed offers to re-engage them. - Need Attention: Low Recency, Low Frequency, Low Monetary. Use deeper discounts strategically to try to convert them into regular buyers. ___ In the coming days, I’ll write an article on how to implement this, with real-life examples using Klaviyo and Shopify for a fashion brand I’m working on at Grapefox. Don’t forget to hit the follow button so you won’t miss it.

  • RFM for fashion brands
Agnese Curti

Marketing Consultant | Co-Active Coach

5mo

Love this, it also addresses the need to maintain a high brand value across customer segments when running promotions/discounts

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