RFM Analysis Settings

General Information

In direct marketing, there are three factors that combine to determine who your best customers are.

• Recency - the more recent a customer's previous purchase, the more likely they are to purchase again in the future.

• Frequency - the higher the total number of orders, the better the customer.

• Money Spent (Gross Profit) - the higher the total dollars spent or profit earned, the better the customer.

Together, these three individual factors form what is known as a customer's RFM value. The way that each company creates its RFM value using these three factors varies, and for this reason M.O.M. enables you to define exactly how this value is to be determined for your company. Once you establish your settings, M.O.M. will automatically calculate and update RFM value for each of your customers based on each purchase made. RFM can be used by your customer service staff to quickly spot a good customer. More importantly, it can be used in the optional List Management Module to quickly create a list of your best customers.

How to Use the Screen

The screen is a table that allows you to build a series of recency, frequency, and monetary value statements to collectively rate each customer with an RFM number. The two fields at the top of the screen, HIGHEST POSSIBLE VALUE and LOWEST POSSIBLE VALUE, are determined by the current statements in the table.

You may have multiple statements for any one type of the three RFM factors based on ranges within each of the three areas. In other words, there could be several statements for Recency, several for Frequency, and several for Monetary Value.

Adding, Editing or Deleting Statements in the Table

1. To add a new statement, select NEW to display the RFM Entry pop-up screen. To edit or delete a statement, select the VIEW/EDIT screen to display the RFM Entry pop-up screen.

2. On the RFM Entry pop-up screen, if you are adding a new statement, use the pull-down menu to select ENTRY TYPE for the statement. If you are editing, make the changes as required. To delete a statement, select the DELETE button.

3. On the RFM Entry pop-up screen for a new statement, establish the RANGE. For Recency the range is in weeks. For Frequency it is number of orders within a specified number of months, and for Monetary Value (Gross or Net Profit) it is dollars within a specified number of months.

4. On the RFM Entry pop-up screen for a new statement, enter the RFM WEIGHT/VALUE that you want to give to customers who meet the criteria of the statement.

5. On the RFM Entry pop-up screen, when you are finished, select SAVE to return to the RFM Analysis Settings screen.

Applying New or Changed Settings to Customers

To calculate or recalculate customer RFM value based on the entries in the table, select the PROCESS button.