The recency, frequency, and monetary model lets #eCommerce companies identify and market to specific consumer groups based on their transactional behaviour.
The recency, frequency, and monetary-value model (RFM) gives merchants the ability to create segments around each customer’s #shopping behaviour.
The RFM model begins with “recency,” when a customer has last purchased from your business.
The more recently a customer has made a purchase with a brand, the more likely s/he will keep the brand in mind.
Establish what “recent” means to your #onlinestore.
For example, you might create these recency groups:
0 to 30 days,
31 to 90 days,
91 to 180 days,
181 to 365 days,
More than 365 days.
“Frequency” in the RFM model refers to how often a specific customer purchases from your business.
For example, an online store selling daily groceries might routinely make weekly #sales to the same customers.
For the monetary-value category, you might use the lifetime value (#LTV) of a customer, a customer’s average order value, or what a customer has spent in the past year.
RFM model is a powerful tool for #marketing segmentation and #performance.