Foundation · 2 min
What you need to know
What is RFM analysis in ecommerce?
RFM analysis scores customers by recency, frequency and monetary value to compare recent activity, repeated purchasing and spend.
What does recency mean in RFM?
Recency is how recently the customer completed the defined event, usually a purchase. Use one reference date and event definition.
What does frequency mean in RFM?
Frequency is how often the customer completed the defined event during the analysis window. Decide whether cancelled or fully refunded orders count.
What does monetary value mean in RFM?
Monetary value is the customer’s spend or contribution during the chosen period. Margin-based value can be more useful than revenue alone.
How can RFM identify valuable customers?
RFM can identify valuable customers by combining recent activity, repeated purchases, and monetary contribution rather than relying on one large order. Inspect the customers behind the highest scores to confirm the model reflects real value.
How can RFM identify customers at risk of leaving?
Customers with a history of frequent or valuable purchases, but unusually low recency may be at risk. Compare their current gap with their own earlier buying pattern before labeling them as lost.
A quick store check
Score a sample of customers for recency, frequency and value using one time window, then inspect the resulting groups.
Foundation · 2 min
Frequently asked questions
Do RFM scores work across every product category?
Not without adjustment. Buying cycles and order values differ, so score comparable customers or normalize the inputs.
How often should RFM segments be refreshed?
Refresh them often enough to reflect meaningful purchases and inactivity, based on the store’s buying cycle and campaign schedule.