How to do RFM Segmentation With SQL and Google BigQuery

An introduction to the Basics of Customer Segmentation Analysis

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RFM segmentation is a technique used in marketing to identify the most valuable customers for a business. It stands for Recency, Frequency, and Monetary Value. It is based on the idea that these three factors are critical indicators of a customer’s loyalty and potential value to a company.

How to do RFM Segmentation With SQL and Google BigQuery, by Mickaël Andrieu (Midjourney V4)

To understand how RFM segmentation works, let’s take a look at each of these three factors:

1. Recency: the time since a customer last made a purchase. Customers who have made a purchase more recently are considered more valuable, as they are more likely to make a purchase again soon.
2. Frequency: the number of purchases a customer has made over a period. Customers who make frequent purchases are considered more valuable, as they are more likely to continue making purchases in the future.
3. Monetary value: the total amount of money a customer has spent. Customers who spend more money are considered more valuable, as they will likely generate more revenue for the business.

Businesses can use these three factors to segment their customers into different…