Recency, frequency, monetary value (RFM) Analytics
Description: RFM is a marketing analysis technique used to identify your company’s best customers based on their spending habits. The more recent the purchase, the more responsive the customer is to promotions, the more frequently the customer buys, the more engaged and satisfied they are, their spend differentiates heavy spenders from low-value purchasers. Knowing your customers’ RFM score will help you focus on acquiring and retaining good customers.
Recency
The freshness of the customer activity, be it purchases or visits
E. g. Time since last order or last engaged with the product
Frequency
The frequency of the customer transactions or visits
E. g. Total number of transactions or average time between transactions/engaged visits
Monetary
The intention of customer to Spend or purchasing power of customer
E.g. Total or average transactions value
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Example-Customer Value & Loyalty using RFM