RFM Analysis: What is it and how does it work?How to segment your customers and identify the best ones
Posted: Mon Feb 17, 2025 9:09 am
User profiling
Why use RFM analysis for individual user profiling?
Find out what it is and how it works in the field of customer segmentation and to identify the best ones by continuing to read our User Profiling Pills section .
Segmenting your user base based on purchasing behavior is essential for a winning marketing strategy. Even more important for a business is to identify the best customers and reward them with targeted and personalized loyalty actions . RFM analysis, recency, frequency, monetary , is a well-known marketing technique to segment your customers quickly and easily, and identify the most “valuable” customers. Often, businesses focus more on finding new customers than on retaining current ones, neglecting and forgetting singapore cell phone number list the value they generate for your business.
RFM Analysis for User Profiling: How does the model work?
The RFM model is based on the Pareto model, according to which 80% of revenue is generated by 20% of its customers . That is why it is important to identify your best customers and retain them.
According to the RFM method, customers who have purchased recently, more frequently and who have spent more in a given period are much more sensitive and responsive to promotions and communications, and therefore to purchases. With this method, it is possible to identify a small but more qualified number of users to contact. In this way, it is more likely to generate the same or higher revenue than if the entire audience had been involved, which significantly reduces marketing costs. With the RFM method, the customer is assigned an individual score, which is calculated based on three metrics:
Recency: The time that has passed since the last purchase; According to the model, customers who purchased more recently are more responsive to promotions than users who purchased less recently.
Why use RFM analysis for individual user profiling?
Find out what it is and how it works in the field of customer segmentation and to identify the best ones by continuing to read our User Profiling Pills section .
Segmenting your user base based on purchasing behavior is essential for a winning marketing strategy. Even more important for a business is to identify the best customers and reward them with targeted and personalized loyalty actions . RFM analysis, recency, frequency, monetary , is a well-known marketing technique to segment your customers quickly and easily, and identify the most “valuable” customers. Often, businesses focus more on finding new customers than on retaining current ones, neglecting and forgetting singapore cell phone number list the value they generate for your business.
RFM Analysis for User Profiling: How does the model work?
The RFM model is based on the Pareto model, according to which 80% of revenue is generated by 20% of its customers . That is why it is important to identify your best customers and retain them.
According to the RFM method, customers who have purchased recently, more frequently and who have spent more in a given period are much more sensitive and responsive to promotions and communications, and therefore to purchases. With this method, it is possible to identify a small but more qualified number of users to contact. In this way, it is more likely to generate the same or higher revenue than if the entire audience had been involved, which significantly reduces marketing costs. With the RFM method, the customer is assigned an individual score, which is calculated based on three metrics:
Recency: The time that has passed since the last purchase; According to the model, customers who purchased more recently are more responsive to promotions than users who purchased less recently.