RFM Analysis
Pronunciation: R-F-M
Also written as: RFM — Recency, Frequency, Monetary
A customer scoring framework that evaluates Recency, Frequency, and Monetary value of purchases to segment and rank retail customers.
Full Definition
RFM (Recency, Frequency, Monetary) analysis assigns scores to customers based on how recently they purchased, how often they purchase, and how much they spend in total. These three dimensions are combined into a composite score that enables retailers to identify their most valuable customers, lapsed buyers, and at-risk segments. RFM is widely used in direct mail, email targeting, and loyalty programme management. The acronym is always written in uppercase. Editors should note that while 'RFM model' and 'RFM analysis' are both acceptable, 'RFM methodology' is the preferred form in formal analytical publications.
Usage
Usage note: Always uppercase. Define the three components on first use in any document where the audience may not be analytics professionals.
In Context
- "The RFM analysis identified a high-value dormant segment that had not purchased in over six months." — Customer analytics report
- "Marketing used RFM scores to prioritise personalised outreach for the retailer's anniversary sale campaign." — CRM strategy document