3. Background
◦ Introduction
◦ The retail store has gathered customer purchase behavior information to make further
marketing decisions
◦ The purpose
◦ Targeting valuable customers to craft marketing strategy and conclude features of
valuable customers
◦ To profile the valuable customers base on purchasing behaviour
◦ Inclusion
◦ Recency, order frequency and dollar spent
◦ All purchase records, customers’ income, home value, age, sex, travel time and
education level
◦ Exclusion
◦ Rents, Apartment Number, Kids, Car Number, Telemarket, Total Returns, Purchase,
County Code, Marriage Status, Job Category, Race. Heating Type, Value per Mail
◦ Definition
◦ The Most Valuable customers: RFM Groups 1,2
◦ The Medium Valuable customers: RFM Groups 3,4,5
◦ The Least Valuable customers: RFM Groups 6,7,8
◦ RFM: Recency, Order Frequency and Monetary Spent
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4. Key Findings
Demographic
◦ There are only 21% customers who are males.
◦ The age level has no significant difference between all RFM Levels, but the last
three levels are intending to be older than others.
◦ The RFM Group 1 has the lowest average travel time.
CUSTOMER PROFILE
◦ Customers in RFM Group1 have contributed 43.79% of the total purchase with
18.57% of the total population.
◦ RFM Group 6 and 8 made nearly 50% of the total purchase during the two
promotions.
◦ RFM Group 7 showed huge individual purchase power during the two
promotions
◦ When a promotion was launched, the RFM Group 6 and 8 will make purchase
dramatically more than usual periods.
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20. Conclusion and Recommendations
20
Group 1 Group 2 Group 3 Group 4 Group 5 Group 6 Group 7 Group 8
Men Apparel 3.25 1.44 1.37 0.56 0.96 0.52 0.49 0.17
Ladies Apparel 4.83 1.51 1.11 1.5 2.58 1.08 3.89 0.82
General Apparel 1.29 0.42 0.79 0.17 0.6 0.27 0.91 0.16
Luxury 0.37 0.47 0.48 0.32 0.07 0.03 0.09 0.08
Jewelry 1.05 0.74 2.7 1.49 1.59 0.43 1.22 0.62
Total Dining 2.53 1.06 2.67 1.64 1.98 0.76 1.2 0.95
Lamps 0.37 0.35 0.99 0.38 0.91 0.25 0.52 0.31
Furniture 1.95 1.18 4.2 2.01 2.78 0.93 2.18 1
Outdoor 1.84 1.15 2.89 1.58 2.35 0.55 1.42 0.72
Leisure 1.58 0.79 2.51 1.48 0.35 0.14 0.69 0.5
Preference Ladies Apparel Ladies Apparel Furniture Furniture Furniture Ladies Apparel Ladies Apparel Furniture
Second Preference Men Apparel Men Apparel Outdoor Dining Ladies Apparel Furniture Furniture Dining
Third Preference Dining Furniture Jewelry Outdoor Outdoor Dining Outdoor Ladies Apparel
Preference Table
21. 21
◦ Conclusion: RFM Analysis showed that the group 1,2,3,4 are
regularly active customers, but the group 7 and 8 showed huge
potential during the promotion periods.
◦ Recommendations:
Focus on female customers
Focus on apparel products
Conduct promotion for home furniture and outdoor products
to boost the sales
Conclusion and Recommendations
22. Appendix-1
22
◦ According to the RFM Analysis, the customers could be divided
into four segments:
Highly Active Apparel Purchaser (Including Group 1, 2)
Affluent-Medium Active Furniture and Outdoor Products
Purchaser (Including Group 3, 4)
Lady Apparel, Home furniture and Outdoor Light
Purchaser(Including Group 5,7)
Promotion-driving Inactive purchaser(Including Group 6,8)
