A stochastic RFM model

Knowledge discovery on RFM model using Bernoulli sequence

“…The most powerful and simplest model to implement CRM may be the RFM model -Recency, Frequency, and Monetary value. RFM is a behavior-based model, meaning it is used to analyze the behavior a customer is engaging in, and make predictions based on this behavior (Colombo & Jiang, 1999;Hughes, 1996).…”

“…Marketing personnel can analyze customers without assistance of professional computer information systems, so it has already used for a long time in the business circles. But RFM model has some shortcomings (Colombo & Jiang, 1999;Hughes, 1996;Miglautsch, 2000):…”

Investments in consumer relationships: a critical reassessment and model extension

“…In response, we not only evaluate whether perceived relationship investment is reciprocated in terms of enhanced relationship quality, but also in terms of behavioural loyalty measured on basis of actual purchase data. In line with the literature on RFM segmentation (Colombo and Jiang 1999), we included behavioural loyalty as a composite of purchase recency (time elapsed since the last purchase), purchase frequency, and monetary value (the average amount of money spent per purchase). We investigate the following hypothesis: H 9 : A higher level of relationship quality leads to a higher level of behavioural loyalty.…”

Accounting for the long-term effects of a marketing contact

“…The contribution of this article is to address this problem. The KDD-98 competition and others (e.g., Colombo & Jiang, 1999;Roelf & Wansbeek, 1995) have suggested myopic definitions of marginal revenue, 3 and another contribution is to note how this underestimates the true value of the contact.…”