What does RFM stand for in customer analytics?

• A. Reach, Frequency, Margin
• B. Revenue, Frequency, Marketing
• C. Recency, Frequency, Monetary Value
• D. Relevance, Frequency, Monetary Value

Answer: (C)

In customer analytics, RFM stands for Recency, Frequency, Monetary Value. Recency looks at how recently a customer made a purchase; customers who bought more recently are usually more responsive to promotions. Frequency measures how often a customer buys within a given period, with higher frequency signaling stronger engagement and loyalty. Monetary Value captures how much money the customer has spent, highlighting the most valuable buyers. Together, these three dimensions help you segment customers to tailor strategies—reactivating dormant shoppers, rewarding frequent buyers, and focusing on high-spenders.

Other options don’t fit because they mix metrics that aren’t part of the standard RFM framework. Reach and Margin aren’t about individual purchase behavior over time; Revenue and Marketing aren’t the same as the specific spending, recency, and purchasing frequency captured by Monetary Value, or the transaction timing captured by Recency. Relevance isn’t a defined component of RFM either.