RFM stands for Recency, Frequency, and Monetary each corresponding to a key customer metric. These metrics are extremely important indicators of a customer’s lifetime value, retention, and engagement. RFM metrics help marketing teams identify the following facts about customers:
The more recent the purchase, the more responsive the customer is to promotions.
The more frequently the customer buys, the more engaged and satisfied they are.
Monetary value differentiates heavy spenders from low-value purchasers.