RFM model

Consumer Behaviour anaLYTiCs

Group memBers: pGCm-4

BiTasTa Bhadra 1407ChinTan desai 1408naYana mahajan 1417nishanT naGda 1420

Submitted to:Mr Mehul Joshi.

RRFFMM

Collaboration Exercises #2, pg. 366

WhaT is rFm?

WHY RFM?

Collaboration Exercises #2, pg. 366

Getting started with RFM...

Collaboration Exercises #2, pg. 366

Collaboration Exercises #2, pg. 366

Collaboration Exercises #2, pg. 366

Collaboration Exercises #2, pg. 366

RFM Calculation

Recency Frequency Monetary RFM5 5 4 5545 5 3 5535 4 5 5455 3 3 5335 3 3 5335 3 3 533

Contd…

Similarly, we code the other quintiles and combine the scores to obtain RFM values.

“555” is the best score.

Collaboration Exercises #2, pg. 366

Life stages for RFM model

High Potential Falling Potential

High Value

Low Value Stage 1

Stage 2 Stage 3

Stage 4

RFM Life StageRFM Life Stage

Stage1: Triers

Stage2: Buyers

Stage3: High Value, but Falling Potential

Stage4: Low Value & Falling Potential

What is RFM Analysis?

RFM Analysis helps companies decide which customers to give selected offers and promotional items.

It is a process for companies to find ways to increase customer spending.

Companies can even use it to target lost customers and give them incentives to purchase items

RFM Analysis can help companies keep track of their customers and build a relationship that can increase sales and productivity.

It also identifies minimal losses – customers spend low dollar amounts in small quantities

Strengths of RFM Analysis

Companies have data that can be used for target marketing.

Marketing budgets will be focused on customers who are more recent, more frequent and spend more.

Specific targeting can increase profit and reduce costs; companies gain by not spending on customers who will not add value

You can offer incentives to middle scoring customers to increase their purchases

Analysis is quick and easy to interpret.

That’s all folks..!!!