The RFM Analysis (Recency, Frequency, and Monetary) is a powerful marketing tool used to look at how customers behave and divide them into groups based on three main factors:
Recency tells you how long ago a customer bought something. Customers who have recently bought something are more likely to buy again, which is a good sign of how engaged they are.
Frequency is the number of times a person buys something. Customers who buy from you often are more likely to stay loyal, and businesses that know this can focus on keeping these important customers.
In terms of money, how much a person pays. Customers who spend a lot of money are often given special deals and reward programs first because they are worth a lot to the business.
Businesses can better target their marketing efforts by dividing customers into groups using RFM research. Companies can send deals and communicate with customers more effectively if they are categorised. For instance, customers who are very valuable might get special deals, and customers who are likely to leave could be sent ads to get them back.
To put it simply, RFM research gives us useful information that helps us make better marketing decisions and keep customers coming back.
