Applying the RFM method in creating assessing customer relations

Abstract

Creating the relationship of loyalty and commitment between the organization and its customers is a basic objective of marketing activities in modern business. Achieving this objective the organization involves its customers into the process of product/service value creation, thus reducing the sale cycle time, ensuring the customers' readiness to buy and forming a large team of collaborators who help shape its image. Due to the complexity of such a system, it is necessary to monitor the effects of the activities that are undertaken. The profitability of the customer relations, as a desired result depends on the cost of establishing such relations, the extent of feedback and the resulting behavior of target customers. One of the basic methods to identify those factors and their interrelation is RFM (Recency, Frequency Monetary) method.