05 August 2006

Frequency

"The holiest of all holidays are those kept by ourselves in silence and apart; the secret anniversaries of the heart." Henry Wadsworth Longfellow

In database marketing, frequency is one of the three core variables. The other twos are recency and monetary, together known as RFM.

RFM analysis helps marketers segment market, and develop effective marketing strategies which maximize ROI, or return on investment. In Handbook of Market Segmentation, Art Weinstein defines "recency as the last service encounter or transaction; frequency assesses how often these customer contact / company experiences occur; and monetary value probes the amount that is spent, invested, or commited by customers for the firm's products and services."

Customers with the highest RFM worth the most attention, where those with the lowest require either win-back or defective strategy to move them up or remove them from the tier.

Among the three variables, F is the most important. Although M gives solid results, which provide the nutrition to survive, without F, or the heartbeat, nutrition is meaningless.

Same applies to touchpoint. The more frequent the touchpoint, the better the relationship.

But, is that a fact?

Nothing lasts if the frequency is high but the chain is filled with negative touchpoint experience. The relationship may seem promising during the initial stage, but it will eventually fail. If the frequency is low but with positive experience, it stands the test of time.

The next factor, or actually the critical success factor, is experience.

1 comment:

Kevin H said...

You sure don't read a whole lot about RFM in the blogosphere, do you?