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Analyze RFM Customers

PreviousPrepare and Validate DataNextCreate a new Model

Last updated 2 years ago

RFM is a common heuristic technique used to measure customer value. The abbreviation ‘RFM’ stands for ‘recency,’ ‘frequency,’ and ‘monetary value.’ Given the common business knowledge that most of a firm’s business comes from a relatively small number of clients (e.g. the 80/20 rule or the Pareto Principle), it is important not only to track RFM customers, but to see how they develop over time or after a launched Campaign.

Tracking how your RFM Customers develop can be a valuable tool for understanding trends in your User Base. However, for launching Print Campaigns, the Model Builder can often choose Customers more effectively, while also offering post-Campaign tools for analysis and improvement.

Identify your RFM customers

Click on the Insights Tab in the top right of your screen. You will be taken to the Insights page.

  • On the Insights page, click the Edit Button in the header.

  • Provide a new Selection Name.

  • Choose any customers to Blacklist as needed.

  • Click apply.

Recency

Recency is crucial because the longer it takes for a customer to return, the less likely they are to return at all.

  • In the customer_recency graph, Filter out Customers with Recent Orders. In our example, we are using customers who have ordered within the last 8 weeks.

Please make sure you have recent transaction data available on the Platform, to be able to filter Recency Customers.

Frequency

Frequency is also important; it measures the ‘intensity’ of a customer’s relationship with your business.

  • In the customer_frequency graph, Filter out Customers with high Frequency of Orders. In our example, we are using customers who have ordered 10 or more times.

Monetary Value

Tracking the monetary value of previous purchases allows you to distinguish between heavy and light spenders, with heavy spenders being preferred.

  • In the customer_monetary graph, Filter out Customers with high Monetary Value. In our example, we are using customers with a value of 4000 Euro or more.

  • Adjust the Sliding Filters as needed to increase or decrease the size of the selection. For example, here we adjusted Recency and Monetary Value to identify our top-10,000 RFM Customers.

  • Click Export to create a Selection of your RFM customers.

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