Three indicators of rfm model

RDM is the three indicators of the model: the latest consumption, consumption frequency, and consumption amount.

1. Latest consumption: This indicator reflects customer loyalty and satisfaction. If a customer's last purchase is far back, his loyalty and satisfaction will be reduced. Because this indicates that he may have started looking for substitutes for other products or services.

2. Consumption frequency: This indicator reflects the customer's purchasing intention and purchasing power. If a customer often purchases the same product or service, his purchasing intention and purchasing power are relatively strong. Because his demand for products or services is relatively high.

3. Consumption amount: This indicator reflects the customer’s purchasing power and financial strength. If a customer purchases a large amount of products or services each time, his purchasing power and financial strength are relatively strong. Because he can withstand greater purchasing pressure and expenditure costs.

Definition of RFM model

Among the many customer relationship management analysis models, the RFM model is widely mentioned. The RFM model describes a customer's value status through three indicators: a customer's recent purchasing behavior, the overall frequency of purchases, and how much money was spent. The advantage of this mechanized model is that the three indicators used in the RFM model can be easily understood.

In practical applications, companies can use the RFM model to manage their own customer relationships, and use the information generated by the model to formulate corresponding strategies, actions and performance plans. For example, companies can use the RFM model and cooperate with the CRM system to regularly send emails or text messages to customers to increase customer loyalty, promote transaction frequency, and increase sales.