“Customer Segmentation Through Rfm (Recency, Frequency, Monetary) Model In Retail Sector”

Abstract

- Marketing has evolved from its times; this modern era is not about masses but individual classes. Mass marketing activities where all customers were assumed are of same personality, traits & behaviour but in reality, every customer is different in its characteristics. In this paper, the RFM technique -Recency, Frequency, Monetary segment the customers based on these variables. Clustering through K-means was used and each individual is given a score based on recency, frequency, revenue clusters which ultimately was used to get the final score. The overall score of each individual was in a specific range & those ranges are being categorized in five type of customer groups - Potential Customers, Promising Customer, Can’t lose them Customers, Risky Customers, Lost Customers.  These groups can help marketers to use their resources efficiently & effectively. It will help companies to target segmented customers in a better way to build marketing & sales strategies.