Imagine running a company selling its product to 50.000 groceries and 50.000 gas stations. How would you allocate your marketing budget? The truth is, each of these specific customers might exhibit unique characteristics. Therefore, for instance, equally treating the entire gas stations would most probably cause over or underspending.
Customer classes such as gas station, market, deli, etc. are not adequate to capture essential customer patterns. So, how can we extract behavioral information from the customer data to leverage marketing campaigns?
RFM, which stands for ‘Recency’, ‘Frequency’ and ‘Monetary Value’ covers 3 significant dimensions to capture customer characteristics.
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