RFM Segmentation Tool
RFM segmentation groups customers by three facts about their buying: how recently they bought, how often, and how much they spent. Those three facts predict who will buy again better than most demographic profiles, and they come straight from sales records.
Everything above runs in your browser. Transactions you paste stay on your device. The tool opens on 2 years of sample hotel bookings for 420 guests.
How it works
Each customer gets a score from 1 to 5 on each measure, by quintile: the top fifth of customers scores 5 and the bottom fifth scores 1. Recency is reversed, so the most recent buyers score 5. Customers with tied values share a score.
Frequency = number of purchases
Monetary = total spend
Score = 1 + the number of fifths of customers with a lower value
Segments come from the recency and frequency scores. Champions score 4 or 5 on both. At risk customers bought often, then went quiet. Lost customers score low on both. The monetary score separates the most valuable lapsed customers, labelled can’t lose them.
Frequently Asked Questions
What is RFM analysis?
RFM analysis is a customer segmentation method that scores each customer on recency (how recently they bought), frequency (how often they buy), and monetary value (how much they spend). Together the three scores predict who is likely to buy again.
How do you calculate RFM scores?
Rank customers on each measure and split them into fifths. The top fifth scores 5 and the bottom fifth scores 1, with recency reversed so the most recent buyers score 5. Customers with tied values share a score.
What are the RFM customer segments?
Common RFM segments are champions, loyal customers, potential loyalists, new customers, need attention, at risk, can't lose them, hibernating, and lost. Each comes from a pattern of recency and frequency scores, and each suits a different campaign.
What data do I need for RFM segmentation?
RFM segmentation needs one row per transaction with a customer ID, a date, and an amount. An export from a booking system, online shop, or CRM usually has all three.
Is this RFM Segmentation Tool free?
Yes. The RFM Segmentation Tool is free and opens straight away in any modern browser, including on a phone. Transactions are processed in your browser and stay on your device.