What is RFM analysis?
Posted: Wed Jan 29, 2025 7:51 am
RFM analysis is a method for analyzing customer trends.
By performing an RFM analysis, you can visualize what is currently needed in numerical terms, allowing you to take an approach that suits your needs.
This article will bahrain cell phone number list explain in detail the basics of RFM analysis, how to do it, and examples of RFM analysis strategies.
Table of Contents [Hide]
1. What is RFM analysis?
2. How to perform an RFM analysis
3. How to perform RFM analysis in Excel
4. Examples of RFM analysis measures
5. Points to note when using RFM analysis
RFM analysis is a method of classifying customers using three indicators and implementing an approach that suits each customer.
A characteristic of this is that it is often done with the goal of maximizing the total value of the customer's profits (LTV) to the company.
The three indicators will be explained below.
Recency
This is information about the date and time when a customer last purchased your company's product.
In this case, it is deemed better to have a customer who last purchased something five days or a month ago than a customer who bought something years or even decades ago.
Frequency
Categorize your customers by the number of times they have purchased your product.
If the number of purchases is large, the customer can be determined to be a good customer; if this value is high, the customer is a regular customer, and if the value is low, it is clear that the number of new customers is not increasing.
Purchase amount (Monetary)
It represents how much money a customer has spent on products so far, and the higher the amount, the better the customer is considered to be.
If the amount per person is high, it can reveal trends such as customers liking the product and buying multiple items or repeat purchases.
Purpose of RFM analysis
Next, we will explain the purpose of RFM analysis.
The purpose of RFM analysis is to understand each customer's situation and implement measures that suit each individual.
In order to achieve good results, it is important to carefully analyze trends and conditions rather than taking the same approach for everything.
In order to generate sales from customers, it is important to build a relationship of trust, and taking the right approach is an effective way to increase that trust.
Benefits of RFM analysis
Now that we have explained the purpose of conducting RFM analysis, we will explain two of the benefits that can be obtained.
Improving the efficiency of marketing measures
First of all, it will help to improve the efficiency of a company's marketing strategies.
By dividing customers into groups based on their tendencies using RFM analysis, you can deliver marketing to each group at the optimal time.
For example, if you implement the same strategy for a regular customer or a good customer who bought from you three days ago, and for a customer who bought from you more than five years ago and is unlikely to return, you risk losing both types of customers.
By performing an RFM analysis, you can visualize what is currently needed in numerical terms, allowing you to take an approach that suits your needs.
This article will bahrain cell phone number list explain in detail the basics of RFM analysis, how to do it, and examples of RFM analysis strategies.
Table of Contents [Hide]
1. What is RFM analysis?
2. How to perform an RFM analysis
3. How to perform RFM analysis in Excel
4. Examples of RFM analysis measures
5. Points to note when using RFM analysis
RFM analysis is a method of classifying customers using three indicators and implementing an approach that suits each customer.
A characteristic of this is that it is often done with the goal of maximizing the total value of the customer's profits (LTV) to the company.
The three indicators will be explained below.
Recency
This is information about the date and time when a customer last purchased your company's product.
In this case, it is deemed better to have a customer who last purchased something five days or a month ago than a customer who bought something years or even decades ago.
Frequency
Categorize your customers by the number of times they have purchased your product.
If the number of purchases is large, the customer can be determined to be a good customer; if this value is high, the customer is a regular customer, and if the value is low, it is clear that the number of new customers is not increasing.
Purchase amount (Monetary)
It represents how much money a customer has spent on products so far, and the higher the amount, the better the customer is considered to be.
If the amount per person is high, it can reveal trends such as customers liking the product and buying multiple items or repeat purchases.
Purpose of RFM analysis
Next, we will explain the purpose of RFM analysis.
The purpose of RFM analysis is to understand each customer's situation and implement measures that suit each individual.
In order to achieve good results, it is important to carefully analyze trends and conditions rather than taking the same approach for everything.
In order to generate sales from customers, it is important to build a relationship of trust, and taking the right approach is an effective way to increase that trust.
Benefits of RFM analysis
Now that we have explained the purpose of conducting RFM analysis, we will explain two of the benefits that can be obtained.
Improving the efficiency of marketing measures
First of all, it will help to improve the efficiency of a company's marketing strategies.
By dividing customers into groups based on their tendencies using RFM analysis, you can deliver marketing to each group at the optimal time.
For example, if you implement the same strategy for a regular customer or a good customer who bought from you three days ago, and for a customer who bought from you more than five years ago and is unlikely to return, you risk losing both types of customers.