What is the RFM framework?

RFM is a method used for analyzing customer value. It is commonly used in database marketing and direct marketing and has received particular attention in retail and professional services industries. RFM stands for the three dimensions:


  • Recency – How recently did the customer purchase?
  • Frequency – How often do they purchase?
  • Monetary Value – How much do they spend?

Wikipedia

Out of your 20,703 customers, you have:


3,410 (16.47%) Growth customers spending $146.75 per order, making up 55.66% of revenue.


2,378 (11.49%) Budget customers spending $34.00 per order, making up 8.73% of revenue.


3,019 (14.58%) At Risk customers spending $120.00 per order, making up 30.93% of revenue.


11,896 (57.46%) Dormant customers spending $22.67 per order, making up 4.68% of revenue.

Actions

  • Reward your Growth customers with loyalty programs and early access to new products.

  • Increase Budget customers basket size with free shipping over $100 and buy-one-get-one deals.

  • Win back At Risk customers with top sellers and free shipping / coupons.

  • Save time and effort by scrubbing Dormant users from email lists. Target at-risk customers early to prevent churn.

  • Investigate your other RFM segments to take more granular actions based on the segment criteria.

RFM Segment Statistics

On the table below are key metrics of the sub-segments that make up the core 4 (High Value, Budget, At-Risk, and Low Value).
This provides additional details into the make up of the sub-segments and offer intuition on personalization strategies.

RFM Segment Users Recency
Days since last order
Frequency
Orders
Monetary
AOV ($)
Avg. Customer Equity
Expected 2 year CLV ($)
MVP (Growth) 817 21 4.70 $168.00 $496.00
High Value (Growth) 671 24 2.50 $165.00 $357.00
Drifted HV (Growth) 1,489 65 2.80 $154.00 $252.00
At Risk HV (At Risk) 1,301 106 2.20 $128.00 $244.00
Churned HV (At Risk) 1,718 276 2.80 $112.00 $259.00
High Spend New (Growth) 433 15 1.50 $100.00 $225.00
Drifted Low Spend (Budget) 1,170 60 1.80 $36.00 $66.00
At Risk Low Spend (Dormant) 1,271 109 1.70 $30.00 $70.00
Low Spend Loyal (Budget) 856 12 5.10 $38.00 $61.00
Churned Low Spend (Dormant) 1,266 216 1.50 $38.00 $62.00
Low Spend New (Budget) 352 29 1.40 $28.00 $55.00
Low Value (Dormant) 9,359 360 0.00 $0.00 $29.00