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The RFMR-Method

RFMR stands for:

Recency
Frequency
Monetary
Rating

The RFMR-method is a simple method (admittedly old - though still highly useful) for easily breaking down customers into smaller segments depending on their purchases. Originally developped by/for the sales-order business this method can easily be adopted to any type of business that has regular customer contacts/purchases. Even dealers and intermediaries can be "scored" with the RMFR-method.

When looking at the sample below, you soon will wonder how to setup the ranges and the points gained for a specific box. This usually is done up front by either intuition/business knowledge or statistical research like cluster- analysis or CHAID.

A sample scoring-sheet from RFMR:

Initial Value

25 points
Last Purchase

< 6 months
+40 points

6-9 months
+25 points

9-12 months
+15 points

12-18 months
+5 points

18-24 months
-5 points

before
-15 points
Frequency of Purchases
within last 18 months

# of Purchases *6
AVG Volume of last
3 Purchases

<50 US$
+5 points

50-100 US$
+15 points

100-200 US$
+25 points

200-300 US$
+35 points

300-400 US$
+40 points

>400 US$
+45 points
# Returned Deliveries

0-1
0 points

2-3
-5 points

4-6
-10 points

7-10
-20 points

11-15
-30 points

>15
-40 points
# Promotions received
since last Purchase

Main Catalogue
-12 points/each

Special Catalogue
-6 points/each

Mailings
-2 points/each

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