RFM Scoring

What does that mean?

  • Recency – Most recent transaction date.
  • Frequency – How many transactions in a specified period of time.
  • Monetary – Total $ spent during same specified period of time.

Your marketing can be much more cost effective if you advertise to your best customers more often, spending less money on the worst customers.

How to do it?

The first thing to decide is what timeframe you want to analyze. A 3 or 4 year timeframe is what we would suggest.

Next you have to decide how many slices you want. We suggest 3 or 4 slices – meaning scoring such a "ABC" (33.3%/slice) or "ABCD" (25%/slice).

There is more than one way to go about the scoring. The quick and cheaper method is where you decide where the splits should be in advance. Sample (monetary):

  • $1000+ = "A"
  • $500 – $999 = "B"
  • $150 – $499 = "C"
  • $1 – $149 = "D"

The problem with just making it up is that you might be way off.

The better way to do the split

The more thorough, correct and expensive method is to calculate the splits.

Recency date split is set by dividing the number of customers by the number of splits you want.

Example: If you have 100 customers and your split is 25%, then the first date split (best customers getting letter "A" for the recency score) will be the date at which the 25th most recent customer made his/her purchase.

The monetary and frequency scores are calculated in the same way.

For the first RFM scoring we do have to recommend the more involved method as we really don't know where the splits should be at this point. Going forward, once we know where the splits currently are, we could take those and hard code them, thus allowing you to continually maintain the RFM score for each client.

Perhaps in a year or two, we could re-score by calculation and see how things have shifted.

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Questions? Please Contact Us.

Telephone Number Lookup

We can add telephone numbers to existing names/addresses.

Here's what we can offer: we have lookup data for BC and AB.

If need be, we can also do reverse lookup — you supply the phone number and we'll give you the rest.

We usually do two forward lookups:

  • Using the name, initial and postal code.
  • Using the address and postal code.

In the cases where we find 'by address' as opposed to 'by Name', we'll supply you the name along with the phone number.

Because we include an initial on the name lookup, you might supply Bob Smith, but we find Tammy Smith “by address”. You could then compare the last names and determine that it's probably the same household.

Correct phone numbers and addresses will enhance your marketing efforts.