Use RFM analysis to segment customers more effectively
Posted: Mon Jan 20, 2025 5:22 am
What is RFM analysis?
The RFM in RFM analysis stands for recency, frequency, and monetary value. RFM analysis is a method of segmenting and ranking customers based on the actions they are likely to take in the future. The criteria for this brazil telegram number database analysis are as follows: how recently did the customer make a purchase, how often did they make the purchase, and how much did they spend. With RFM analysis, companies are able to determine which customers are the most loyal and should receive special treatment.
Recency
Recency refers to the date of the customer’s last purchase. Note that it doesn’t matter what the purchase was. If it was purchased recently (e.g. in the last few weeks), then the brand is still fresh in the customer’s mind and is more likely to choose the same brand in the next transaction. This is why B2C businesses often pick out new customers and target them in their ads.
frequency
The next factor is the frequency of purchases within a given time period. This can vary greatly depending on the nature and price point of your product/service.
The more frequently a customer purchases your product, the more engaged and loyal they are to your brand. This is a key metric in determining customer lifetime value.
currency
The monetary factor is the total amount of the purchase; if we only consider money, even if the purchase frequency is small, if the total amount is large, the customer is considered a good customer. However, if the frequency angle is included, the customer's positioning changes.
For example, if a customer has made frequent purchases in the past and the total amount is large, but has no recent purchase history, the customer is considered to have switched to a competitor's product.
The RFM in RFM analysis stands for recency, frequency, and monetary value. RFM analysis is a method of segmenting and ranking customers based on the actions they are likely to take in the future. The criteria for this brazil telegram number database analysis are as follows: how recently did the customer make a purchase, how often did they make the purchase, and how much did they spend. With RFM analysis, companies are able to determine which customers are the most loyal and should receive special treatment.
Recency
Recency refers to the date of the customer’s last purchase. Note that it doesn’t matter what the purchase was. If it was purchased recently (e.g. in the last few weeks), then the brand is still fresh in the customer’s mind and is more likely to choose the same brand in the next transaction. This is why B2C businesses often pick out new customers and target them in their ads.
frequency
The next factor is the frequency of purchases within a given time period. This can vary greatly depending on the nature and price point of your product/service.
The more frequently a customer purchases your product, the more engaged and loyal they are to your brand. This is a key metric in determining customer lifetime value.
currency
The monetary factor is the total amount of the purchase; if we only consider money, even if the purchase frequency is small, if the total amount is large, the customer is considered a good customer. However, if the frequency angle is included, the customer's positioning changes.
For example, if a customer has made frequent purchases in the past and the total amount is large, but has no recent purchase history, the customer is considered to have switched to a competitor's product.