Is RFM Model Outdated (Emergence of RFM+ Model)

Recency, Frequency and Monetary (RFM) is the standard model used by many retailers/banks and financial institutions to segment their customers. This model is a time-tested one and has never failed.

 

So

 

The RFM is slowly becoming outdated.

Emergence of Social media, Mobile devices has made the researchers to go with the RFM+ (RFMPlus Model). The RFMPlus includes social media information, Customer Lifetime Value (CLV), Last Visit / Latency / Frequency between visits.

Segmentation Standards / Framework

Nielsen is the market leader in Segmentation. It's framework/system - PRIZM has more than 66 distinct groups/segments (mostly for US Customers) based on their demographic, geographic and purchase behaviour. They have catchy nicknames, images and behavioral snapshots that     help the marketers better understand the customers

P$YCLE is a segmentation system that evaluates consumers using key demographic factors that have the greatest effect on their financial behaviors, such as income, age, presence of children, home ownership and Nielsen’ proprietary measure of IPA. This is mostly used in Finance and Insurance industry

The advantage it is to identify consumer segments who have the resources and propensity to purchase specific financial products and services

Advantages of Segmenting - A case study

Women control over 80% of purchases of most products and services. Many companies have yet to fully capitalize from marketing and selling effectively to women. Insights in Marketing is dedicated to help increase the effectiveness of your marketing efforts towards women!