RFM

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

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Topics: Glossary Rfm

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