Segmentation in Zoho CRM

Segmentation in Zoho CRM

Customer segmentation is the process of categorizing customers based on common characteristics such as their region, industry, product preference, or revenue generated. It is a powerful technique that helps companies better address their customers' needs and behavior. They can also use the information to market to each group more effectively and appropriately. Read more about Segmenting Customers in the Zoho eBook attached.

Significance of segmentation based on purchase pattern

Segmenting customers based on a single characteristic or parameter may sometimes limit the company's vision and cause misinterpretations by analyzing the entire customer base as a single entity. For example, if you segment your customers based only on the total revenue that they generate, and deduce that the ones who have fetched the highest revenue are the most valuable for your business, that may be only partially true.

How many times have these customers made a purchase from you? When was their last purchase? Are they returning customers? How frequently do they purchase? A customer who made one large purchase three years ago may not be as valuable to you as a loyal customer who regularly makes smaller purchases.

You need the answers to questions like these to guide you towards the next step, the right product to offer for their next purchase. For example, you might only send premium feature announcements to customers who make frequent relatively high value purchases, as they will more likely to be interested in upgrading. 

Analyzing customer behavior based on their previous purchases will help you determine a better customer retention strategy.

Permission Required 
Users with Admin profile can access this feature. 

RFM metric for post-purchase segmentation

The most common metric used for post-purchase segmentation is the RFM metric. It evaluates the customers based on their recency, frequency, and monetary values.
  1. Recency: When was the last time they purchased?
  2. Frequency: How often do they purchase?
  3. Monetary: How much have they spent?

These metrics help you to segment customers into groups that make sense, understand them based on their past purchases, and engage them with more personalized campaigns.

Segmentation in Zoho CRM

You must select the appropriate fields for the recency, frequency, and monetary values in your business and give each a score ranging from 1-5 for different levels of the RFM metric. For example:
  1. If the last purchase date is last month, the recency score is 2.
  2. If the total number of products purchased is 5, then the frequency score is 4.
  3. If the total purchase amount is above $60,000, the monetary score is 4.

Based on the scores that you set, the system will compute the RFM metric for the record (customer, contact, or prospect) and display it on the record's detail page.

  1. The RFM values and the segment label field will be shown only in the standard modules.
  2. With the segmentation module, the user can only generate one published segmentation. However, a user can utilize the same segmentation module to make many drafts.
Important limits:

  1. Number of segmentations - 1 active or inactive and 5 unpublished or draft
  2. Score calculation method - Manual
  3. Number of records from the contributing module used for segmentation - 100,000 (can be expanded up to 200,000)
  4. Daily limit for republishing - Twice 
  1. Number of segmentation - 5 active or inactive and 20 unpublished or draft
  2. Score calculation method - Manual and automatic
  3. Number of records from the contributing module used for segmentation - 1 million (can be expanded up to million)
  4. Daily limits for republishing - 10 times
Labelling the segments

You can create different labels based on your customers' RFM scores to help other teams understand each customer's position in the sales cycle and take appropriate actions. Each segment can have up to 8 labels and Zoho CRM offers a set of predefined labels, which are:

Note: The RFM scores given here are just for representation. Admins must set the values according to their current business needs. 

Segment Label
RFM scores
R: 4 or 5
F: 4 or 5
M: 4 or 5
Loyal customer
R: 2 or 3
F: 4 or 5
M: 4 or 5
Recent customer
R: 1
F: 4 or 5
M: 4 or 5
R: 3
F: 1 or 2
M: 1
Customer needs attention
R: 2 or 3
F: 2 or 3
M: 2 or 3
About to sleep
R: 2 or 3
F: 1
M: 2 or 3
Cannot lose them
R: 1
F: 4 or 5
M: 4 or 5
Lost customers
R: 1
F: 1
M: 1

You can edit these predefined labels or delete them and add new labels. For example:

Segment label
Factors influencing the RFM scores
RFM score
Must be pursued

  • The last visit was more than six months ago

  • Does not visit very often

  • Usually spends a good amount

R: 2

F: 1

M: 4
Seasonal visitors

  • The last visit was a year ago

  • Used to visit once a month

  • Spent very little

R: 1

F: 4

M: 2

Configuring segmentation

You can create segmentation in both standard and custom modules.

Six steps to set up segmentation

  1. Choose the segmented module, and define which records shall be considered for segmentation.

  2. Choose the contributing module, and choose the records for which the rule shall be applied.

  3. Select the linking field.

  4. Select the RFM fields.

  5. Set the score range and define the criteria for each score.

  6. Add segment labels.

Choose the segmentation module, contribution module, and linking field

  1. Segmentation Module: This is the module you want to configure the segmentation for. Segmentation modules store the customers' details. 
    For example, let us create a segmentation for the Contacts module. You might choose other customer based modules like Leads, Vendors, or any other custom module depending on your business.

    The next step is to choose the records for segmentation. You can either select all records or use specific criteria as per your requirements.

  2. Contribution Module: The module that stores the RFM metrics or details related to the purchases such as the last purchase date, the number of purchases, and the total amount spent. You can select modules like Deals, Quotes, Purchase Orders etc. You can specify the records that shall be considered for the segmentation based on the RFM details by adding criteria for the contribution module.
    For example, using office spaces as criteria, you can create a segmentation based on the deals closed for properties in office spaces. 
      If you have integrated Zoho Finance Suite in your organization, then the modules present in that application can also be used to segment your records. See also: Zoho Finance Suite integration with CRM
  1. The custom modules created after Zoho Finance Suite integration will be displayed as a separate section under the native modules of CRM.
  2. You cannot deactivate your Finance Suite integration when you have an active segmentation in your organization.
  1. Linking field: The lookup field that bridges information between the segmented module (Contacts) and the contributing module (Deals). This field creates a link between the modules and allows you to fetch information about the segmented module. For example, a lookup field Contact Name, from the Deals module in the Contacts module can serve as the linking field.

Select RFM fields

Select appropriate fields in the contributing module that contain the RFM values.
  1. Recency field:  Any date or date-time field that represents the last or the most recent purchase date. For example, "Sale Closing Date", "Purchase Completion Date", "Deal Closed On", or "Sold On".
  1. Zoho CRM will consider the most recent date as the value for the recency field.
  2. For date-time fields, the date will be considered for the recency field, time will not be taken into consideration.
  1. Frequency field:  You can select either By count or By field .
    1. If you choose By count , the system will automatically consider all the records that are associated with the segmenting record, i.e. the number of deals associated with a contact or the number of products bought by a customer.
    2. If you choose By field , you have to manually select a field that indicates the frequency, for example, "Number of Products Bought", "Number of Items Sold", "Number of Deals Won", or "Number of Service Requests Received".
    3. Note that the frequency field must be in the segmenting module, not the contributing module.

  1. Monetary field: Any currency field that indicates an amount. For example, "Order Value", "Cost", "Purchase Amount",  or "Deal Amount". If a customer has purchased multiple products or a contact has multiple closed deals, then system will automatically compute an aggregate amount and derive a value for the monetary field.

Set the score and define criteria for each score

By default, score for each metric (recency, frequency, and monetary) is set between 1 to 5. You can decrease the range by dragging the score range slider to the desired position to set it to 1-2, 1-3, or 1-4. You can either set the score manually or allow the system to do it automatically.

Manual:  You will manually define criteria so the system will know whether the R, F, and M scores should be 1, 2, 3, 4, or 5. For example:
  • Set the recency score to 5 if the sale closing date was between this week and last week or was last month. Set the score to 4 if the most recent purchase time was before yesterday, and so on.

  • If the number of purchases is more than 8, the frequency score is 5. If it is between 5 and 10, the score is 4, and so on.

  • Set the monetary score to 5 if the amount spent is more than $1500, set it to 4 if it is between $800 and $1200, and so on.

Automatic:  The system will automatically compute the RFM score using the percentile method. The entire data set will be divided into five parts (so that scores can be set within a range of 1-5. That is, the RFM scores will be given as 1, 2, 3, 4, and 5), with distribution at every 20th percentile. The RFM scores range from 0 to 20, 20 to 40, 40 to 60, 60 to 80, and 80 to 100 on the percentile scale.

The data set will be sorted in order. For example, for the recency score, the data set will be sorted from the most recent purchase to the oldest purchase. For example, if the most recent purchase was a week ago and the oldest purchase was 6 months ago, then CRM will set these two timelines as the boundaries and draw the percentiles within this range. For frequency, the data set will be sorted from most frequent to least frequent, and for monetary it will be sorted from the highest amount to the lowest.


  1. Automatic calculation is only available in the Ultimate edition of Zoho CRM.
  2. The most recent date, the highest frequency, and highest value are subject to change, so the system will recalculate the data range and the number of records automatically once a day.
  3. You can change the scoring criteria from automatic to manual or vice-versa. Doing so will reset the computed values to their defaults and the scores will be recalculated based on the criteria set.

Adjust the percentile bar

The default percentile ranking is set to the 20th percentile for even record distribution. However, you can reposition the slider to change the percentile ranking, if required.

Note: The system will take into account 20,000 records for the first configuration for automatic RFM scoring. After that, up to one million records can be computed.

Reset the score range

You can reset the score range after defining the criteria. This will cause the scoring to be reset to the default values.

You can also reposition the score range slider, but this will remove all custom settings and use the default settings that apply to the revised score range. All custom labels will be removed and adjusted to the default labels in the revised score.

Creating labels for the segment

CRM provides eight predefined labels that you can use for segments. You can edit or delete these labels and add new ones. For each label, you need to define the RFM range from 1 to 5.

To configure segmentation
  1. Go to Setup > Automation > Segmentation.
  2. Click  Create New Segmentation and specify the following settings in  the  Customer Segmentation  page:
    • Segmentation name: Enter a name.
    • Segmentation Module: Choose the segmentation module from the dropdown list.
    • Select All Records or Based On Criteria.
      If you select Based On Criteria, set the criterion. 

    • Contribution Module: Choose a module from the dropdown list for the RFM values.
    • Select All Records or Based On Criteria.
      If you select Based On Criteria, set the criterion.
    • Linking field: Select a field from the dropdown list. (e.g. Customer)
    • RFM Fields Entry:
      • Recency field : Select a field from the dropdown list.
      • Frequency field: Select By count or By field. If you select By field, select the field from the dropdown list.
      • Monetary value: Select a field from the dropdown list.
  3. Click  Next 
    You will be redirected to choose the customer scoring.

  4. In  How would you like to set criteria for customer scoring?  choose  Automatic or  Manual.
    • If you choose Automatic, move the slider to change the default percentile rank for each R, F, and M level and click Compute.
    • If you choose Manual, click +Add Criteria and then select the field and specify the value and click Submit. Repeat this for each rank.
  5. Click Next. You will be redirected to label the segments.
  6. Click Add New Label and enter the label name and the RFM values.
  7. Click Submit.
  8. Click Publish to configure the segmentation.

Editing a segment

You can edit a segment from the segmentation page and revise the values in the following fields:
  1. Linking
  2. Recency
  3. Frequency
  4. Monetary

Note that while editing the configuration, you will not be allowed to change the segmented and contributing modules.

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