RFM analysis is a marketing technique used to quantitatively rank and group customers based on the recency, frequency, and monetary total of their recent purchases. It is a type of customer segmentation and behavioral targeting used to help businesses rank and segment customers based on their purchasing patterns. The RFM model considers three factors:

• Recency: How recently a customer has made a purchase.
• Frequency: How often a customer makes purchases.
• Monetary Value: How much money a customer spends.

RFM analysis enables businesses to identify clusters of customers with similar values and produce targeted direct marketing campaigns tailored to specific customer types. It helps businesses to use email or direct mail marketing to target messages that a large swath of specific kinds of customers are more likely to respond to. RFM analysis can be performed using CRM software, and many add-on packages exist that can take CRM data and automatically measure the RFM factors and provide graphs and suggestions. However, getting started with RFM analysis can be as simple as using a spreadsheet in Excel.