11. Recency Frequency Monetary RFM
5 5 4 554
5 5 3 553
5 4 5 545
5 3 3 533
5 3 3 533
5 3 3 533
Contd…
Similarly, we code the other quintiles and combine the scores to obtain RFM
values.
“555” is the best score.
13. High Potential Falling Potential
High
Value
Low
Value Stage 1
Stage 2 Stage 3
Stage 4
RFM Life StageRFM Life Stage
Stage1: Triers
Stage2: Buyers
Stage3: High Value, but
Falling Potential
Stage4: Low Value &
Falling Potential
14. What is RFM Analysis?
RFM Analysis helps companies decide which customers to give selected offers
and promotional items.
It is a process for companies to find ways to increase customer spending.
Companies can even use it to target lost customers and give them incentives
to purchase items
RFM Analysis can help companies keep track of their customers and build a
relationship that can increase sales and productivity.
It also identifies minimal losses – customers spend low dollar amounts in small
quantities
15. Strengths of RFM Analysis
Companies have data that can be used for target marketing.
Marketing budgets will be focused on customers who are more recent, more
frequent and spend more.
Specific targeting can increase profit and reduce costs; companies gain by not
spending on customers who will not add value
You can offer incentives to middle scoring customers to increase their
purchases
Analysis is quick and easy to interpret.