This RFM model is built around three quantitative factors: recency, frequency, and monetary value. Each customer is assigned a score in each category, ranging from 1 to 5. The higher a customer's rating, the more likely they will do business with the company again. The RFM model validates the marketing hypothesis that 80% of business is generated by 20% of customers. The recency factor is based on the idea that the more recently a customer has purchased from a company, the more likely the company and brand will be remembered for future purchases. Learn more about this model and start creating your own diagram using EdrawMax templates!
