RFM Model
Pronunciation: R-F-M
Also written as: RFM — Recency, Frequency, Monetary
A customer segmentation framework that scores customers on Recency, Frequency, and Monetary value of their purchases.
Full Definition
The RFM model is a behaviour-based segmentation technique that evaluates three dimensions: how recently a customer made a purchase (Recency), how often they purchase (Frequency), and how much they spend in total (Monetary value). Each customer receives a score on each dimension, and these scores are combined to produce segments such as 'champions', 'at-risk', or 'lost customers'. RFM analysis is widely used in retail CRM and personalised marketing analytics. Editors should always expand the acronym on first use and verify that the document consistently applies the same scoring scale (e.g., 1–5 quintiles) throughout.
Usage
Usage note: Expand on first use as 'RFM (Recency, Frequency, Monetary)'. Confirm scoring methodology is consistent when editing documents that reference RFM tiers.
In Context
- "The RFM model identified 15% of the customer base as 'champions', accounting for 42% of total revenue." — Customer segmentation report
- "RFM scores are recalculated monthly and used to trigger personalised email communications." — CRM analytics documentation