This is classic customer segmentation. A tried and true method of segmenting (or rating) your customers by importance. An RFM Analysis provides uncommon insight into your customers’ behaviour and shows you where to find current customers that might behave like your very best customers. If you know who bought most recently, how many times and how much they’ve spent – you’re on your way to predicting behaviour – now that’s powerful!
Recency – the last time a customer made a purchase.
Frequency – the number of times a customer has purchased.
Monetary Value – the dollar amount(s) of purchases.