The Iron Rule of RFM

But we can’t use those exact numbers directly for coding, because we’d need literally thousands of different codes to distinguish between customers whose lifetime value was $200, $201, $202, etc.

To cut the number of mailing codes to manageable size, we need to create RFM GROUPS.

Figure 1 on page 62 shows a simple mailing code system that divides customers into a reasonable number of RFM groups.