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Identifying Your Best Customers,
by Nat G Bodian
The best prospects on any consumer list are those who
make frequent purchases in significant amounts. Identifiable by computer
search, they fit into the RFM formula: Recency of purchase, Frequency of
purchase, and Monetary value of purchase. The RFM formula works best when
mail-order catalog houses assign points in each of the three RFM
categories. To avoid waste circulation, points are assigned in each
category and catalogs are then mailed only to those who get the most
points and are deemed the most likely to buy again.
(Taken from "Direct Marketing Rules of Thumb)
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