Marketing Metrics - Saturday, July 25, 2009 5:56 - 0 Comments

Hot marketing acronyms: What is RFM - Recency Frequency Monetary?

RFM stands for Recency, Frequency and Monetary Value.

• Recency - When was the last order?
• Frequency - How many orders have they placed with us?
• Monetary Value - What is the value of their orders?

It has been used by direct marketers for over 40 years as a segmentation tool to increase Return on Marketing Investment. The basic premise of RFM is that customers who have purchased more recently, more frequently and have spent more with your company are your best prospects for future direct marketing campaigns.

Interestingly, if you attend direct and interactive marketing seminars or conferences around the world, you will hear marketers of all sorts namedrop RFM. However, I - for one - am convinced that most have never bothered to actually understand what RFM really is all about, let alone applied this highly effective model in practice. Continue…