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RFM Analysis

RFM Analysis is a marketing technique used to categorize and segment customers based on their behavior and interactions with a business. RFM stands for Recency, Frequency, and Monetary Value, which are three key factors used to evaluate customer value. - Recency: This measures how recently a customer has made a purchase or interacted with the business. Customers who have made a purchase recently are typically more engaged and valuable to the business. - Frequency: This measures how often a customer makes a purchase or interacts with the business. Customers who make frequent purchases are generally more loyal and valuable to the business. - Monetary Value: This measures how much money a customer has spent on purchases. Customers who have spent more money are usually more valuable to the business. By analyzing these three factors, businesses can identify their most valuable customers and tailor their marketing strategies and offers to cater to their specific needs and behaviors. RFM Analysis helps businesses optimize their marketing efforts, improve customer retention, and increase overall profitability.