Investopedia

Continue to Site »

Recency, Frequency, Monetary Value - RFM

Filed Under » , , ,
Dictionary Says

Definition of 'Recency, Frequency, Monetary Value - RFM'

A marketing analysis tool used to identify a firm's best customers by measuring certain factors. The RFM model is based on three quantitative factors:

Recency - How recently a customer has made a purchase
Frequency - How often a customer makes a purchase
Monetary Value - How much money a customer spends on purchases

RFM analysis often supports the marketing adage that "80% of business comes from 20% of the customers."
Investopedia Says

Investopedia explains 'Recency, Frequency, Monetary Value - RFM'

Nonprofit organizations have relied on RFM analysis to target likely donors, as people who have made donations in the past are likely to make additional donations. RFM analysis classifies customers with a number ranking system for each of the RFM factors. The "best" customer would receive a top score in each of the three categories score, this allows comparison between potential contributors or customers. Despite the useful information that is acquired through RFM analysis, firms must take into consideration that even the best customers will not want to be over-solicited, and the lower-ranking customers may be cultivated with additional marketing efforts.

Articles Of Interest

  1.

    The Marketing Director's Pitch

    Are your shoulder's wide enough to carry a company's reputation?

  2. Sales Director Career Provides Daily Challenge

    Find out what you need to do to close the deal on this investment management position.

  3. The Green Marketing Machine

    Don't let corporations greenwash their dirty laundry. Learn how to spot a phony.

  4. Generational Marketing: Harvest The Whole Family Tree

    Attract new clients by tailoring your message to specific age groups.

  5. The Lucrative World Of Third-Party Marketing

    Hedge funds don't sell themselves. Marketing experts reel in the big fish.

  6. Financial Designations That Employers Require

    We break down the designations that are important to have if you want to work in the financial sector.

  7. If You Don't Mind Volatility, Deere Could Still Do Alright

    Though Deere's shares sold off after earnings, the business model is sound and rolling along.

  8. Agilent Isn't Making It Easy On Investors

    Core operating performance at Agilent needs to improve

  9. Consumer Spending As A Market Indicator

    What people buy and where they shop can provide valuable information about the economy.

  10. Should You Get A CFA, MBA Or Both?

    These certifications require time and money, but combined programs are making obtaining both designations more realistic.
comments powered by Disqus
Marketplace
Hot Definitions

  1. Disaster Loss

    A special type of tax-deductible loss, similar to a casualty loss, where a loss has been incurred by taxpayers who reside in an area that has been designated as a federal disaster area by the President.

  2. Fool In The Shower

    The notion that changes or policies designed to alter the course of the economy should be done slowly, rather than all at once.

  3. Pattern Day Trader

    An SEC designation for traders who trade the same security four or more times per day (buys and sells) over a five-day period, and for whom same-day trades make up at least 6% of their activity for that period.

  4. Cost-Push Inflation

    A phenomenon in which the general price levels rise (inflation) due to increases in the cost of wages and raw materials.

  5. Happiness Economics

    The formal academic study of the relationship between individual satisfaction and economic issues, such as employment and wealth.

  6. Affluenza

    A social condition arising from the desire to be more wealthy, successful or to "keep up with the Joneses." Affluenza is symptomatic of a culture that holds up financial success as one of the highest achievements.
Trading Center