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Name: Farhan Iqbal Instructor: Hassan Raza Sap: 70112728 Section: B Assignment #03 Marketing Management

This document discusses Coca-Cola's customer experience cycle and use of RFM (Recency, Frequency, Monetary) analysis to segment customers. RFM analysis uses transaction data to assign scores to customers based on how recently they purchased (Recency), how often they purchase (Frequency), and how much they typically spend (Monetary value). Coca-Cola has over 1.9 billion servings consumed daily worldwide and uses RFM analysis to identify their most important customer segments and predict future behavior. Automating RFM analysis provides benefits like saving time and resources, eliminating errors, maintaining up-to-date customer segments, and consistency across departments.

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Farhan Borana
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71 views6 pages

Name: Farhan Iqbal Instructor: Hassan Raza Sap: 70112728 Section: B Assignment #03 Marketing Management

This document discusses Coca-Cola's customer experience cycle and use of RFM (Recency, Frequency, Monetary) analysis to segment customers. RFM analysis uses transaction data to assign scores to customers based on how recently they purchased (Recency), how often they purchase (Frequency), and how much they typically spend (Monetary value). Coca-Cola has over 1.9 billion servings consumed daily worldwide and uses RFM analysis to identify their most important customer segments and predict future behavior. Automating RFM analysis provides benefits like saving time and resources, eliminating errors, maintaining up-to-date customer segments, and consistency across departments.

Uploaded by

Farhan Borana
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Name: Farhan Iqbal

Instructor: Hassan Raza


Sap: 70112728
Section: B
Assignment #03 Marketing Management

Topic:
Design a Customer Experience Cycle
Coca-Cola
1.9 billion servings
How many drinks does The Coca-Cola Company sell worldwide each
day? More than 1.9 billion servings of our drinks are enjoyed in more
than 200 countries each day.
Coca Cola has created a long-term
profitable customer relationship

RFm model
RFM represents a segmentation strategy that uses historical
transactional
data to help you segment your customers based on three variables:
Recency (R), Frequency (F), and Monetary Value (M).
• Recency (R) – how recently a customer has purchased from you;
• Frequency (F) – how often a customer purchases from you;
• Monetary Value (M) how much a customer usually spends.
RFM Analysis Example – Here is how it works
RFM analysis reveals data anomalies that will allow you to understand
which are the most important groups of customers when you weigh
your
customer acquisition costs against the margin they generate.
REVEAL collects your data through a feed and accesses the data related
to your customers, products, categories, and orders placed. It provides
you
with a smart reporting dashboard that gives you insights into how your
eCommerce customers buy, how frequently they do so, who your top
customers are, and which ones think of leaving you.
RFM segmentation is a method that helps you identify the most
important
types of customers by grouping them and giving scores to their
Recency,
Frequency, and monetary values.
calculate RFM metrics
To calculate the RFM metrics or variables, we use your historical data.
More specifically, we look at the minimum and maximum values for
Recency (R), Frequency (F), and Monetary values (M) from your store
We then split the data for R, F, and M into five groups with the use of
quintiles
Each bucket will receive a score based on a scale that suits your
business:
• From 1 to 5 (see table below) if you have more than 200k
customers;
• From 1 to 4 if you have 30-200k customers;
• From 1 to 3 if you have less than 30k customers.
eCommerce stores have different sales cycles. Depending on what is
being sold, a customer with 10 orders placed may receive a score of 5
(for a store where sales cycles are long) and a score of 1 (for a store
where sales cycles are short)
Each one of your customers will receive points for Recency, Frequency,
and Monetary based on buying patterns in relation to all the other
customers
Points Recency (days since Frequency / Monetary
last purchase) values (number of orders
and orders value)
5 within the last month customers who are in the top
5% in the database
4 within the last 3 customers who are in the top
months 20% in the database
3 within the last 6 customers who are in the top
months 30% in the database
2 in the last year customers who are in the top
60% in the database
1 more than a year ago the customers who spent and
bought the least

After points are being assigned, each customer in your database will
receive a unique score. This score will constantly change based on the
customer’s interaction with your store.
RFM score = 555 | RFM score = 234 | RFM score = 115 | RFM score =
313
We group similar scores into 11 RFM Customers Groups and display
them on the Dashboard, where you can see them, and from where you
can take a further business decision based on your conclusions;
For each group and sub-group of customers, we display how many
customers there are in there and the revenue they have brought so far.

Benefits of RFM Analysis


Performing RFM analysis allows you to understand customer behavior
and predict how segments could evolve in the future. The predictive
character is one of the most important benefits of using RFM analysis
for your business.
Although manually performing RFM analysis is better than nothing, it
has a lot of shortcomings.
If you plan to use RFM segmentation for your future initiatives,
performing automated RFM analysis comes with multiple advantages:
Save valuable resources
Instead of spending hours aggregating data and preparing
spreadsheets, you focus solely on analyzing your RFM segments.
Automation allows your teams to extract valuable insights to optimize
strategies and increase customer lifetime value.

Eliminate errors
You can’t afford errors in customer segmentation and making decisions
around RFM analysis. Automated RFM solutions eliminate errors
associated with manual work and offer reliable data for your growth
plans.

Up to date
Using automated RFM segmentation ensures that all your segments are
constantly updated. You can perform regular analysis knowing that
you’re looking at fresh reports, or you can select a certain period to
search for trends or anomalies.

Real-time actions
Having up-to-date information allows you to take advantage of
opportunities that arise – like nurturing new high-value customers, or
prevent negative trends – like an increasing number of complaints from
a category of newly acquired customers.

Consistency and traceability


Segmenting your customers based on the RFM model helps you
maintain consistency in analyzing segments and traceability over the
evolution of your RFM segments. This way, all departments share the
same view over the segments using the same reference system.

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