RFM stands for Recency, Frequency, Monetary Value. It’s a simple and yet effective customer scoring algorithm that has been used for about a hundred years, now. Especially in catalogue marketing, because RFM saves costs: The method discriminates possible responders from non-responders before the send out. RFM scores correlate with the likelihoods of responding to the next offer.
Email marketers do also use RFM analysis. Less, to save costs (email is “for free”), but more to predict subscriber values and to: Continue reading