Why is RFM in that order?
Table of Contents
Why is RFM in that order?
The order of the attributes in RFM corresponds to the order of their importance in ranking customers. Recency is the most important factor. Why? Because the longer it takes for a customer to return to your business, the less likely he or she is to return at all.
Why does the RFM rubric present the three key measures in that order?
RFM stands for Recency, Frequency, Monetary value. These three considerations regarding a customer can indicate how a business should respond to that customer.
What is RFM analysis What is the purpose of doing RFM analysis?
RFM analysis is a marketing technique used to quantitatively rank and group customers based on the recency, frequency and monetary total of their recent transactions to identify the best customers and perform targeted marketing campaigns.
What does RFM stand for?
RFM
| Acronym | Definition |
|---|---|
| RFM | Recency, Frequency, Monetary |
| RFM | Reduced Functionality Mode (software) |
| RFM | Regional Facilities Manager (various locations) |
| RFM | Right-Arm Fast Medium (cricket; also seen as RAFM) |
What is a recency?
Definition of recency : the quality or state of being recent.
What has economic value?
Economic value is the measurement of the benefit derived from a good or service to an individual or a company. Economic value can also be the maximum price or amount of money that someone is willing to pay for a good or service. As a result, economic value can be higher than market value.
How are RFM scores assigned?
To calculate score, we first sort values in descending order (from highest to lowest). Since we have 15 customers and five scores, we assign a score of five to first three records, four to next three and so on. For overall RFM score, we simply combine R, F and M score of the customer to create a three digit number.