In a previous article, it was mentioned that products should be promoted well and it helps to have an efficient marketing analysis. This method is well known as Data Mining in Marketing.
One of the famous data mining method is called RFM analysis, which stands for Recency, Frequency and Monetary. The principle behind this analysis says “80% of the business comes only from 20% customers.” Below are the following features:
• The first important factor in identifying customers who are likely to respond to a new offer is “Recency”. Customers who purchased recently are more likely to purchase again than those customers who purchased a long time ago.
• The second is “Frequency”. Customers who made more purchases in the past are more likely to respond than those who made fewer purchases.
• The third one is the total amount spent, which is referred to as “Monetary”. Customers who have spent more in the past are more likely to respond than those who have spent less.
Another analysis method that is also popular is called Cluster Analysis.
Cluster Analysis is an exploratory tool designed to reveal natural groupings (or clusters) within the data. For example, it can identify different groups of customers based on various demographic and purchasing characteristics.