Assignment RFM

Consider ABC Sportswear, a catalog seller of Sportswear. You have data on the purchase
behavior of six customers over the last five months (assume you are analyzing the data in the
month of June). The following table gives the dollar amount that each customer spent during
January through May:

Customer Jan Feb Mar Apr May TOTAL POINT SCORE

1 250 0 200 30 80 560 56 5
2 30 300 0 150 0 480 48 4
3 320 0 30 0 50 400 40 3
4 60 20 0 10 0 90 9 1
5 40 200 0 0 10 250 25 2
6 200 40 150 100 0 490 49 4

The following table gives the frequencies of purchases in each month for the six customers: JAWABAN.
Customer Jan Feb Mar Apr May TOTAL POINT SCORE
1 1 0 2 1 1 5 15 3 RECENCY FREQUENCY MONETARY RFM
CID
2 1 1 0 3 0 5 15 3 CID VALUE SCORE CID VALUE SCORE CID VALUE SCORE SCORE
3 1 0 1 0 1 3 9 2 1 20 5 6 30 5 1 56 5 1 535
4 2 1 0 1 0 4 12 2 3 20 5 1 15 3 6 49 4 2 434
5 1 3 0 0 1 5 15 3 5 20 5 2 15 3 2 48 3 3 523
6 5 1 3 1 0 10 30 5 2 10 4 5 15 3 3 40 4 4 421
Analyze each customer’s profitability in June using the RFM Method. Use the 4 10 4 4 12 2 5 25 2 5 532
following table for arriving at the RFM scores: 6 10 4 3 9 2 4 9 1 6 454
Recency = 20 points if purchased within the last 1month
10 points if purchased 2 months ago
3 points if purchased 3 or 4 months ago (count only once)
i.e. If customer has purchased both 3 and 4 months ago
(Feb and March), the recency point is 3. (not 6) 2 points if purchased 5 or more months ago
Relative weight 50%

Frequency = 3 points for each purchase within the last 6 months

Relative weight 20%

Monetary Value = 10% of $ volume of Purchase within the last 6 months

Relative weight 30%