Is The Rainbow Puffle Real 2010

Data Mining? Start dall'RFM

Data mining and ' One of the most 'fascinating - and misunderstood - of CRM. The idea of \u200b\u200bfinding "gems of information" hidden his information from 'data mining that taste of "technology is indistinguishable from magic" mentioned in the law of Clarke.

But, in fact, data mining requires expertise and related investimenti.Cosi 'today I wanted to start talking about the "mining of the poor": the RFM coding applied to CRM. Another simple and effective ideas of A. Hughes ( Dbmarkets@aol.com ).

RFM stands for Recency, Frequency, Monetary:

• Recency: Date of last purchase
  
• Frequency: number of purchases
  
• Monetary: Total purchases
  

The RFM and 'index, added to each record of your customer database, which is created from three pieces of information.

Here's how:

1. Order database clients according Recency (more 'recent first)
   
2. Divide the database into 5 equal parts (quintiles) in the first quintile
   
3. enter "5" in a field "R "you added to the record. Write "4" in the second quintile and so 'the 3 steps to via.Ripetete Frequency (the "F") and Monetary (the "M"). At this point, each record in your customer database you will have an index of three digits, 555 to 111.

The RFM coding your customers 'sensitivity' to your offers. " They range from customers 555 (those that are better) apr 'and clients 111 (worst answer or do not respond). The response rate to an offer is distributed in a linear decreasing between these two extremes.

Why 'the RFM working? 'Cause based on past buying patterns and then, and' the best indicator of future purchases. The RFM

then allows you to predict what customers' profitable and also carry out promotional activities to measure the expected profit!

Here's how:

1. RFM coded your database on the current situation
   
2. extract a sample random representative
   
3. made a test mailing of your offer
   
4. measured the response rate to break even
   
5. measured the response rate for each RFM cell
   

now so that 'your promotional campaign a success, you have to send it only to cells RFM - this time around the database - which have a response rate greater than or equal to that of break even.

But the RFM is also used for marketing intelligence. Federal Express has used the "RFM Migration Analysis" to understand how clusters of customers moved over time between different RFM cells. This allowed easy identification of different behaviors that require different strategies.

Today with the Internet and email, the RFM method has lost a bit 'of validity'. Today you can still do all your emailing a database with very low costs. But that is another matter, the validity of theory and practice of the method remains.

Use it in your CRM and see.

REFERENCE
Making Your Database Pay Off Using Recency, Frequency and Monetary Analysis

CRM Strategy - The first blog dedicated to the CRM strategy, curated by Marco De Veglia. FOR YOU FREE report on Best CRM Website: http://www.crmformarketers.com/