When two do the same thing, it's not the same

[suchona.kani.z]

The basic building blocks of RFM analysis are three metrics, the initial letters of which give the acronym in the name:

Recency – when the customer last made a purchase (the time that has elapsed since the last transaction).
Frequency – how often the customer made purchases (number of transactions they made over a certain period).
Monetary – how much the customer spent (total or average amount over a certain period).

RFM analysis is based on the Pareto principle, which states line database that 20% of your customers bring in up to 80% of your revenue . You can identify these 20% of your best clients through RFM segmentation, as well as the one-fifth of the least important ones.

This analysis owes its popularity primarily to its simplicity, as you only need three variables to perform it – customer identifier, purchase value and purchase date . In principle, you should be able to create it yourself in common spreadsheet tools, but you can also choose to automate it through CRM systems. For details on RFM analysis, read the article Increase your profit by incorporating RFM analysis into your emailing .

Keep in mind that there is no single right segmentation or one pattern for ideal segmentation analysis. Every business will benefit from something different. We hope you have found at least one of the methods listed that is right for your business.