August 21, 2017

12/09/2016 RFM or propensity score – which wins out when put head to head?

RFM, or ‘recency frequency monetary value’ to give it its full name, has long been the targeting tool of choice for the home shopping industry; so we decided to give it a challenge by building as an alternative a propensity model using exactly the same data set.

An RFM score will describe the overall strength of the relationship between a business and a customer, but the question is whether we can improve on that by building a propensity score targeted at a specific purchase activity or category.

A great advantage of RFM scores is that because they are not proposition specific, they can be used across a wide range of applications; however, if the scale of any actual marketing selection is substantial enough, then the extra resource required to build the propensity score may be justified.

OPEN to get the result…