According to research from Arthur Hughes of The Database Marketing Institute, there three elements in customer database are the best indicators for data analysis: Recency of purchase, Frequency of purchase, Monetary value of purchase.

＊Recency: the number of days since the customer's latest purchase, which can be regarded as the customer's activity level for the enterprise. The calculation method is to rank each customer based on the number of days from the last purchase date. The top 20% customers are R5, the 21%~40% are R4, etc., and the lowest is R1.

＊Purchase Frequency: The number of times customers purchase within the RFM calculation interval can represent the customer's loyalty to the company. The calculation method is ranked according to the number of purchases of customers within the RFM calculation interval. The top 20% of customers are F5, the 21%~40% are F4, etc., and the lowest is F1.

＊Monetary: the average purchase amount of each order in the RFM calculation interval, which can represent as the contribution and value of customers to the enterprise. The calculation method is ranked according to the average consumption amount of customers in the RFM calculation interval. The top 20% of customers are M5, the 21%~40% are M4, etc., and the lowest is M1.

The RFM grouping rules used in CRM's Insights are as follows:
1. Use F (Frequency) and M (Monetary) to divide the data into FM1~FM5


2. Use FM1~FM5 and R (Recency) for Segmentation



Brief introduction of the above grouping results:

＊Best Customers: Your top customers who who make large, frequent, and recent purchases. They are loyal and high-contribution customers for your brand.

＊New customers: Customers who have purchased recently, but the frequency and amount of purchases are low. They may be customers who purchase for the first time.

＊Promising: Consumers that make large purchases with high amount, but haven't make recent purchases. Give them individualized focus, or you could lose high contribution customers .

＊Stable Customers: Consumers who have made purchases recently, but the frequency and amount of purchases are average. They are stable customers who need to be stimulated to make purchases.

＊Needing Attention: The number of purchases and the amount are relatively low, and there is no purchases for a period of time. The importance to focus on these customers are low because the contribution is not high.

＊Hibernating: Customers with high purchase frequency and amount, but have not spent for a long time. These may be customers who you have lost.

＊Passers-by: The number of purchases and the amount of purchases are relatively low, and they have not make purchases for a long time. They may be customers who pass by and only buy once.