Reach Frequency, Monetary (or RFM) analysis is a longstanding tool for identifying segments of customers that are higher value.
RFM takes into account 3 factors for determining the value of different customers:
When did the customer last buy an item? Can we identify if a customer is “active” or has “lapsed”?
How many times has a customer made a purchase? Can we identify customers who make many purchases, or few purchases?
How much in total has each customer spent?
Using some mock data from dunnhumby I was able to put together a dashboard in PowerBI to showcase the utility of having this analysis in interactive form.
For more details on this RFM analysis check out my post over on the Panalysis blog.