Understand the 3D RFM model by looking at it as a 2D Customer Grid

RFM being a three-component model makes it difficult to picture how it works.

If you can visualize a 3D cube in your head, that's how RFM represents your entire customer base. But each individual customer would be a 3D point inside that cube, making it hard to visualize.

RFM model as a cube

Instead of looking at all three components at once, you can choose look at only two components. Then your customers all show up on flat sheet (a plane, a 2D shape). In Repeat Customer Insights, this is called the Customer Grid.

When laid-out properly, Customer Grids can make RFM more intuitive to use. In the app, the higher scores are to the top-right and represent the best customers. The worst scores are in the bottom left, making them the worst customers.

(One caveat, the Frequency-Monetary grid behaves a bit differently but I'll describe that at another time).

The middle areas are the "it depends" areas. That's where the app's description and advice come in handy.

RFM as a model is pretty powerful. It's kinda difficult to run the analysis without software like Repeat Customer Insights and it takes a bit of work to get how the scores interact. Once you're past that though, it's easy to remember and work with.

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Eric Davis

Topics: Rfm Customer grid Customer analysis

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