Analytics Mini Case: Valuing Customers Using the RFM Method

RFM is a method frequently used by direct marketers to assess the value of customers. RFM stands for $($R$)$ecency$,($F$)$requency$,$

and $($M$)$onetary Value.

Imagine you are a direct marketer for an online company that specializes in selling unique candies from around the world that are

difficult to acquire in the United States. You have a large customer database, and you would like to apply the RFM method to value

your current customers. You have two jobs. First, $(1),$ you need to assign the correct RFM code values to a subset of your customer

database. Second, $(2),$ based on this RFM coding scheme you need to identify which customer subgroups should be targeted with a

specific type of direct marketing message.

Click the icon to view the common approach to calculate RFM$.$

Click the icon to view the table summarizing overall customer statistics relating to RFM$.$

Click the icon to view the customer subset information.

Which person represents the MOST appealing RFM segment of the $4$ listed here?

with the RFM value of $.($Round to the nearest whole number.$)$

Which person represents the LEAST appealing RFM segment of the $4$ listed here?

with the RFM value of $($Round to the nearest whole number.$)$

Which person represents the segment that we may target with advertising appeals in order to increase purchase frequency?

with the Frequency code of $.($Round to the nearest whole number.$)$

Which person represents the segment that we may target with advertising appeals in order to increase cross$-$buying and$/$or upgrading

to higher value items?

with the Monetary value code of $.($Round to the nearest whole number.$)$More Info

Which person represents the MOST appealing RFM segment of the $4$ listed here?

with the RFM value of $($Round to the nearest whole number.$)$

Which person represents the LEAST appealing RFM segment of the $4$ listed here?

with the RFM value of $($Round to the nearest whole number.$)$

Which person represents the segment that we may target with advertising appeals in order to increase purchase frequency?

with the Frequency code of $.($Round to the nearest whole number.$)$

Which person represents the segment that we may target with advertising appeals in order to increase cross$-$buying and$/$or upgrading

to higher value items?

with the Monetary value code of $.($Round to the nearest whole number.$)$