Determine the recency, frequency, and monetary value
Recency, Frequency, and Monetary (RFM) is a method of ranking data based on variables that represent the most recent visits to the store, the greatest number of orders placed, and the most money spent on orders.
In WebSphere Commerce Analyzer, RFM is applied to the orders associated with contracts and accounts. The following conditions determine RFM:
- The most recent date of the shopping activity.
- The greatest number of orders placed.
- The most amount of money spent on the orders.
The data is ranked according to each variable and then divided into five equal bins. Each contract or account is assigned a number between one and five, which corresponds to their bin assignment. The contract or account with the most recent shopping activity, the greatest number of orders, and the most money that is spent will have an RFM value of 555. The contracts or accounts with the least activity, the smallest number of orders, and the least amount spent have an RFM value of 111. RFM requires a minimum of five records (the number of bins) to run successfully.
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