RFM analysis
RFM (Recency, Frequency, Monetary) scores customers on how recently and often they buy and how much they spend, to segment them for marketing.
RFM analysis is a customer-segmentation method that scores every customer on three behavioural dimensions: Recency (how long since their last order), Frequency (how many orders they've placed) and Monetary value (how much they've spent). Each dimension is usually split into quintiles (1–5), and the combined score maps customers into named segments such as Champions, Loyal, At risk and Lost. It's one of the highest-leverage segmentations for e-commerce because it uses only order history you already have — no tracking or surveys needed.
How it's measured
Rank customers into 5 buckets on each of recency, frequency and monetary spend, then combine the scores. High recency + high frequency + high spend = your best customers.
Related terms
Customer lifetime value (CLV / LTV)
Customer lifetime value is the total revenue (or profit) a customer generates across their entire relationship with your store.
Repeat purchase rate
Repeat purchase rate is the share of customers who have placed more than one order.
Cohort analysis
Cohort analysis groups customers by a shared start point (e.g. first-order month) and tracks their behaviour over time.
Churn rate
Churn rate is the share of customers who stop buying over a given period.