But, of those that do respond, the responses usually come from customers in higher ranking RFM cells. Federal Express has good data on customer purchase history. Then, they used this coding in a very interesting way. Determine the extent to which customer migration patterns fell into discernible clusters Identify investment and marketing strategies appropriate to each migration cluster. Assess the effectiveness of RFM migration vs. other segmentation and targeting strategies available for marketing promotions.
Migration means, of course, that some customers improve their performance over time.
They move to a higher ranking RFM cell. Other customers regress to lower ranking RFM cells. Profitable marketing comes from anticipating the migration of groups of customers so that the marketing and service dollars are spent on higher value customers who will, in return, improve their spending and retention habits. Marketing dollars are thus not wasted on lower value customers who are less likely to migrate up. Purchase transactions were summarized at a half year level for each of the four services.