Stands for Recency - Frequency - Monetary Value. Theoretically, we will have segments like the below:
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Low Value: Customers who are less active than others, not very frequent buyer/visitor, and generate very low - zero - maybe negative revenue.
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Mid Value: In the middle of everything. Often using our platform (but not as much as our High Values), fairly frequently and generates moderate revenue.
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High Value: The group we don’t want to lose. High Revenue, Frequency, and low Inactivity.
Result:
Segmenting customers based on the RFM scores:
Detecting products that are most often sold together:
