Recency, Frequency, Monetary Value (RFM)

Recency, frequency, monetary value (RFM) is a marketing model in which brands segment customers into groups based on their buying behaviors.

What Is Recency, Frequency, Monetary Value (RFM)?

Segmenting customers enables brands and retailers to better personalize marketing materials to those customer's needs, interests, and behaviors. Recency, frequency, monetary value (RFM) is a method of determining critical factors of shoppers' behaviors to enable effective segmentation and engagement. Specifically, the method focuses on three factors: - Recency, or how long ago a customer made a purchase - Frequency, or how often a customer makes a purchase - Monetary value, or how much money a customer spends on each purchase To use the model, brands and retailers gather this data on their customer base, then score each customer within each of these three categories. Ideally, customers would generate top scores in all three categories, but low scores also give brands vital information to guide their business efforts. These scores allow the brand to forecast future demand, personalize marketing initiatives to specific customer segments, and make data-informed business decisions.

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