RFM-Analysis: Definition and real-world applications
RFM-Analysis (Recency, Frequency, Monetary analysis) has emerged as a cornerstone strategy for consumer brands aiming to segment, understand, and maximize the value of their customer base. This comprehensive guide delves into the nuances of RFM-Analysis, illustrating its pivotal role in contemporary marketing and customer relationship management.
Understanding the Core of RFM-Analysis
RFM-Analysis segments customers into various groups based on three pivotal dimensions: Recency (how recently a purchase was made), Frequency (how often purchases are made), and Monetary (how much is spent on average). This segmentation is instrumental in identifying the most and least valuable customers, offering insights into customer behaviour and preferences.
Traditional vs Modern Approaches in RFM-Analysis
Traditionally, RFM-Analysis ranked customers in quintiles based on the three RFM dimensions. However, modern approaches, such as those adopted by Daasity, utilize deciles and automated RFM score calculations, streamlining the process and enhancing accuracy.
