How can you understand how recently, how often and how much your customers spend?
RFM (recency, frequency, monetary) analysis is a marketing technique used to segment customers, by examining how recently a customer has purchased (recency), how often they purchase (frequency), and how much the customer spends (monetary).
The benefits of this analysis include:
Visualising standard marketing analysis (such as RFM) provides better definitions of segments/buckets
Quickly identify which customers are your most profitable or valuable
It is clear to see (and understand) how different the segments are from each other
Understand what ‘types’ of customers are in each segment
Can be useful to help inform marketing and sales activities
Tracking over time can bring a further layer to RFM analysis, answering questions like “how are customers moving between segments?”, and “which customers should be our focus for this month?”