The document discusses the RFM model for customer behavior analytics. RFM stands for Recency, Frequency, and Monetary value. It is a technique used to segment customers based on how recently they made a purchase, how often they make purchases, and the total monetary amount of their purchases. The document provides details on calculating RFM scores, describes different customer life stages based on RFM, and highlights strengths of using RFM analysis, such as targeting the most profitable customers.

1. RFM model

2. Consumer Behaviour anaLYTiCs
Group memBers: pGCm-4
BiTasTa Bhadra 1407
ChinTan desai 1408
naYana mahajan 1417
nishanT naGda 1420
Submitted to:
Mr Mehul Joshi.
RR
FF
MM

3. Collaboration Exercises #2, pg. 366

4. WhaT is rFm?

5. WHY RFM?

6. Collaboration Exercises #2, pg. 366
Getting started with
RFM...

7. Collaboration Exercises #2, pg. 366

8. Collaboration Exercises #2, pg. 366

9. Collaboration Exercises #2, pg. 366

10. Collaboration Exercises #2, pg. 366
RFM Calculation

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.

12. Collaboration Exercises #2, pg. 366
Life stages for RFM model

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.

16. That’s all folks..!!!