Mining Your Customer Files

The chart on page 64 (Visual RFM Segmentation) shows ways to segment a customer list. For each customer cell in this hypothetical catalog, we see the number of names or pieces mailed, percent response and sales per catalog ($/Book). The best customers are those in the upper right hand corner cell—where the customers have purchased in the last 30 days (recency), have made the most lifetime purchases (frequency) and spent the most lifetime dollars (monetary) with the catalog. The worst customers are those in the lower left hand corner cell—where they haven’t purchased for over 60 months (recency), have only made one purchase (frequency) and have spend less than $50 lifetime (monetary) with the catalog. With this information, we can build a ranking or response expectation of all of the catalog’s customers. We have built a data mining tool to help improve campaign results.