What is RFM Segmentation?

A powerful tool in customer segmentation is the RFM model, which stands for Recency, Frequency, and Monetary. This method analyzes customers based on:

Recency: How recently the customer made a purchase.

Frequency: How often the customer makes purchases.

Monetary: How much money the customer has spent. 

Using the RFM model, you can identify your most valuable customers and create segments such as:

Valuable Customers: Those who purchase recently, frequently, and for high amounts.

Loyal Customers: Frequent buyers, even if their purchase amounts are smaller.

Inactive Customers: Previously active customers who haven't purchased in a while.

One-Time Buyers: Customers who made a single purchase and didn't return.

This segmentation allows you to tailor your communication and marketing to each group's unique behaviors and preferences. For example, create campaigns to re-engage inactive customers or reward your most loyal ones.

What is a Customer Segment?

A customer segment is a group of customers with similar characteristics or behaviors. Examples include purchase history, website activity, or demographic data.

Segments are updated automatically once a day to ensure the segmentation is always current and based on the latest data.

1. Segment: A segment is a specific group of customers you want to analyze or target. The segment determines which customers are included based on the configurations attached to it.

2. Configuration: A configuration contains a set of rules defining the criteria for the segment. You can decide whether to include or exclude customers matching these criteria.

3. Rules: Rules specify what is required for a customer to meet the configuration's criteria. They can be set to apply in combination or individually, offering flexibility in selection.

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