RFM is a customer segmenting model that used a customer's Recency, Frequency, and Monetary attributes for segmenting. It's been used by businesses for decades for its power and effectiveness.
It works by grouping customers by each attribute and scoring how they compare. For example, customer who last ordered the most recently will be scored a 5 Recency, customers who ordered a bit earlier will get a 4, and so on.
Each of those scores are combined into one single score for the customer, like 553.
Most RFM models score from 1-5 but some will use 1-4 or even 1-3. The more numbers the more unique customer segments the model creates. Though 1-5 will give you 125 different segments, which is enough for most Shopify stores (even huge ones).
For full details on how to use RFM in Shopify RFM analysis for Shopify stores: a comprehensive guide
Eric Davis
Learn what your customers are actually doing instead of just guessing
One of the best ways to build a sustainable business starts by getting your customers to come back. Mastering that simple process can be difficult, but builds a lifelong business.
Repeat Customer Insights can help you understand your customer's behavior. With its collection of behavior reports, you can see what they're actually doing instead of guessing and having your efforts fall flat.