Recency, Frequency, Monetary Value

Understand Your Customers Through RFM

RFM is the acronym for recency, frequency, and monetary value.  An RFM analysis tells you which customers are likely to respond to a new offer.

The RFM analysis assigns a 3 digit RFM score (from 111 thru 555) to each customer.  A 555 indicates that a customer has purchased a product or service most recently, most frequently, and at the highest monetary value.

recency, frequency, monetary value

Understand Your Customers Through RFM

Based on this RFM heat map, your company should focus on customers in the darkest blue boxes which indicate customers that bought recently, frequently, and spent the most money.

recency, frequency, monetary value

Net Revenue Through RFM

Based on this RFM scoring and heat map of your existing customers, your company can now laser focus your inside and outside sales individuals on those customers with the highest 3-digit score and the darkest square colors.  This will save you money by directing human resources with the right targets, inform you with who best to communicate with via email or direct mail, and which customers will have the biggest impact on your net revenue.

Deliverables

  • RFM scores for each of your customers;
  • RFM heat map;
  • Write-up of findings, verbal explanation, and   recommendations.