This is a guest entry by Sam Nam. Sam is the Vice President of Marketing at Digital Room, Inc., a venture-backed e-commerce printing company, where he manages marketing team of 50 professionals working in customer acquisition, retention and analytics. Find him online at samnamiam.com.
Loyal readers are the foundation of success for content creators. All content marketing KPIs – visits, page views, social shares, registration, inbound links, and ranking keywords – are driven by loyal readers, but often content marketers focus on the results instead of the source of success! In this post I will explain one method to measure and track the loyalty of your readers using RFM valuation.
What is RFM?
The RFM method is based on the Pareto Principle, also known as the 80-20 rule. The principle states that, for many events, 80% of the effects come from 20% of the causes e.g. “80% of sales revenue comes from 20% of clients” or “80% of user engagement and sharing comes from 20% of your readers”. Some content marketers object to the 80-20 rule when it comes to their websites, because a majority of their user engagement and traffic comes from bursts of new visitors.
However, I would argue sudden spikes from viral social media traffic is unpredictable and short-lived. In addition, focusing on these spikes can lead to buzz-feed-esque, sensationalized and shallow content that draws “wham-bam-thank-you-m’am visitors” instead of loyal repeat readers. Now, don’t get me wrong! It is great to get a social media hit, but that is the cherry on top of the proverbial ice cream sundae. The actual ice cream sundae and true value of a content site is the repeat loyal readership – the vital few.
If the Pareto Principle holds true for content marketing, the mini-infographic below demonstrates the huge value of measuring your loyal readership. They are the vital few who share, promote and link your content.
At DRI we have observed the correlation between repeat loyal readers and valuable engagement metrics. Below is a chart of new and repeat sessions for a new blog property we launched in January 2014 at Digital Room, Inc. For the first six months of the year, we pushed hard on writing new content and promoting in social media, but in July we slowed down to focus on other projects. However, we observed repeat sessions remained high as multi-session readers returned to consume more content. Had we been focused on total visits, we would’ve seen a steep decline in visits during July and missed out on understanding our own success!
By peeling apart the onion layer by layer, we saw the steady growth of repeat visitors was driving a surge in backlinks. Our new loyal readers began naturally linking to our content.
One of our blog posts on customer relationship management (CRM) was even cited as an external source on Wikipedia. (Although Wiki links are nofollow, they often result in tons of dofollow links as other writers use Wikipedia article source links for their research.
As you can see, developing a content strategy that successfully builds loyal repeat readers results in more than just repeat visits.
The RFM method attempts to identify the most valuable segments of your customers or readers by measuring three metrics:
- Recency: When did the customer make their last purchase?
- Frequency: How often does the customer make a purchase?
- Monetary: How much money does the customer spend?
According to RFM, your most valuable customers purchased recently and return often to buy large amounts. If we apply this concept to content readers instead of customers, we use page views (the source of ad impressions) as a proxy for monetary value (i.e. more page views = more ad revenue).
- Recency: How many days since the reader’s last visit?
- Frequency: How many sessions has the user engaged in?
- Monetary: How many pageviews per session does the reader consume?
Using these three metrics we can segment our readers based on RFM value and identify our high value segments. Over time we can identify what content strategies contribute to the growth of high value reader segments and allocate more time and resources to those successful strategies.
How to Build a Monthly RFM Report Using Google Analytics
Every month visitors need to be divided into MECE (mutually exclusive, completely exhaustive) segments. MECE means all visitors must be included in your segmentation and all visitors should only be included in one segment. Below is an example of an RFM segmentation matrix for a content site:
Using the Google Analytics reports found under Audience > Behavior, you can divide your visitors into the segments shown above.
Since new visitors have never been to your site, we cannot measure the recency of their last visit. We will only segment them based on pageviews. Navigate to the Audience > Behavior >Engagement report in Analytics and follow the steps below.
A) Set your time period
B) Increase sampling for the highest precision
C) Change the Google Analytics Segment to New Users
D) Change the distribution to Page Depth
E) This is the count of New Visitors with 1 Pageview
F) This is the count of New Visitors with 2-4 Pageviews
G) This is the count of New Visitors with 5+Pageviews
The repeat visitors for both 2-4 session and 5+ session segments can be pulled from the same engagement report by using Analytics custom segments. Create a new segment using advanced conditions below:
A) Name the segment with a descriptive title
B) Filter sessions for User Type exactly matching Returning Visitor
C) Upper limit of sessions (if applicable)
D) Lower limit of sessions (if applicable)
E) Lower limit of days since last visit (if applicable)
F) Upper limit of days since last visit (if applicable)
Pulling it all together…
After you’ve built advanced segments in Google Analytics, pulling the monthly values for each segment is easy. Setup a chronological report like the example shown below and fill in your data points.
Using a report format with historical values in chronological order makes it easy to spot important trends. For example, when our content team took our foot off the gas pedal in June and saw traffic slow down, Total Visitors declined sharply, but Repeat Visitors with 5+ Sessions experienced far less attrition than the other segments.
Using RFM methodology to segment your readers is a good start, but the true value lies in analyzing the data and identifying opportunities. Optimize your content strategy by identifying what type of content your “20% Vital Few” readers like or dislike. Focus on what works and cut out what doesn’t. Make decisions based on the needs of your loyal readers instead of chasing “buzz words” and trendy topics. Building loyal repeat readership is slow to start, but the cumulative growth can lead to exponential gains given enough time.
Sample RFM Report
Sam shared a sample RFM report via Google Drive. You can access it here after submitting a request.