Goals

Using a RFM model to score your users allows you to assess their current value. Tracking these scores over time can help you predict their behavior. It's an easy, intuitive way of gaining insight into your user base.

Approach

1. Calculate recency, frequency, and monetary values per customer
2. Each RFM metric should be divided into quintiles
3. Assign scores for each RFM metric
4. The RFM segments should be defined using the scores from step 3

Results/Answers

RFM segmentation helps give an understanding of who are the best customers in the database, what behaviours they exhibit that make them the best customers ,what behaviours the worst customers exhibit?

RFM analysis can help increased ;

• Customer retention
• Response rate
• Conversion rate
• Revenue
• Email CTR