Understanding which of your customers are most likely to stop doing business with you – their ‘retention risk’ – is crucial for efficient marketing. Instead of treating all customers the same, we need to segment them based on this risk. This allows us to focus our efforts, and marketing spend, on those who need it most, boosting overall return on investment.

So, how do we actually segment by retention risk? It’s not about gut feeling; it’s about data. We look at a combination of behavioural and value-based factors. Here are a few key segments we commonly identify for Australian SMEs:

• The ‘At-Risk’ Group: These customers have shown declining engagement. This could mean less frequent purchases, reduced website visits, or decreased interaction with your emails. They’re not actively churning *yet*, but the warning signs are there.
• The ‘Churning’ Group: This segment is showing clear indicators they’re about to leave. Think cancelled subscriptions, multiple complaints, or a significant drop in spending. Immediate intervention is needed.
• The ‘High-Value, At-Risk’ Group: These are your best customers – they spend the most and are most profitable. If their engagement starts to slip, it’s a major red flag. Prioritise retaining these customers above all others.
• The ‘Passive’ Group: These customers haven’t shown any recent engagement, but haven’t actively indicated they’re leaving. They’re a lower priority than the others, but shouldn’t be ignored completely.

To identify these segments, we utilise Recency, Frequency, and Monetary Value (RFM) analysis. This looks at how recently a customer purchased, how often they purchase, and how much they spend. Combine this with engagement metrics – email open rates, website activity, support tickets – and you’ll have a solid picture of retention risk. Many Customer Relationship Management (CRM) systems offer automated RFM scoring, making this process easier.

Don’t fall into the trap of assuming all customers are equal. By segmenting based on retention risk, you can tailor your marketing messages, offer targeted incentives, and proactively address concerns before customers walk away. The outcome? A more efficient marketing strategy, increased customer lifetime value, and a stronger, more resilient business heading into 2026 and beyond. Your next step should be to audit your current customer data and identify these key segments within your own business.