Where Is It Found

Steps to Calculate RFM

Step 1: PSCUM.CRM Advanced Search

Launch the menu option PSCUM.CRM Customer Management and select Advanced Search. 

Select SALES HISTORY within Advanced Search. 

The following example uses only Selection 1.

• Use the first dropdown control to "Select customers that...".
• Use the second dropdown control to indicate customers that "Purchased."
• Enter the date range of sales you want to include in the calculation. In this example, we used the current year to date.
• Finally - and this is critical - check the box to indicate "Calculate (R)ecency, (F)requency, (M)onetary Score."
• Then select DONE to finish.   

Once returned to the CRM Grid, note the yellow control labeled "Refresh Needed."  Click to refresh the CRM screen and pull up all customers meeting your Advanced Search criteria.

Step 2: Review

Immediately following the RFM score calculation, nine additional columns appear in the CRM grid, highlighted below. Calculated RFM scores are temporary and are shown for comparison with a customer's last RFM score if any. Calculated RFM scores are only visible while Advanced Search is active and disappears from the grid when ended. 

In the image above, Rows 14 and 15 have no Last RFM score, probably because one was not previously saved or was removed. Rows 1 through 13 contain the Last RFM score, however, and the current RFM calculation indicates changes in behavior compared to the Last RFM calculation. For example, Row 6 shows a current RFM of 114 compared to the Last RFM of 453, indicating that the customer's behavior changed negatively since the last analysis. That is, purchased less recently, purchased less frequently, but spent more than the last analysis.  

Step 3: Use Mass Change to Save the most recently calculated RFM score.

To save and make a permanent record of the current RFM calculation, choose Work With Checked to Mass Change selected records.

Choose RFM as the Field to Change ... 

... then what action to take.

Press Enter then Continue to review and confirm before and after results.

PSCUM.CRM - RFM Program Logic - Building Buckets

Method:  Inspect the items being measured. Find the top and bottom values. Take the difference and divide by 5 giving bucket ranges. Assign items to buckets. Done (Tim Smith, 1981- )

Recency Example (the R-Score of RFM)

• Scenario:  Order Selection in 24-month date range, from Jan 1, 2020, through Dec 31, 2021 
• 24 months / 5 = 4.8 months (rounded to 5)
• Yields five 5-month ranges

Questions for Programming: 

1. What date does the system use: Batch, Sold, Shipped?  Assumes program uses Batch Date since individual line items can be SOLD and SHIPPED on different dates.  
2. When rounding, where does the program put the short range?  In the example above, priority was given to R-Score 5, Last Purchase within last 1-5 months. R-Score 1 represents last purchase 21-25 months ago.  Since our date range only encompasses 24 months, the program will not encounter anyone whose last purchase was 25 months ago. 
3. Is the system selecting negative amount transactions? That would negatively affect a RECENCY score.

Frequency Example (the F-Score of RFM)

• Scenario:  N customers, each having completed a different number of purchases within whatever date range. The value of n does not matter. 
• Tally purchasers per customer
• Highest individual count is 15
• Lowest individual count is 1 
• 15+1 = 16 /5 = 3.2 (rounded to 3)
• Yield five 5 ranges in increments of 3 

Monetary Example (the M-Score of RFM)

• Scenario:  N customers, each having completed a different number of purchases within whatever date range at whatever monetary value. The value of n does not matter. 
• Tally net sales amount per order per customer 
• Highest individual net sale amount is $2,500
• Lowest individual net sale amount is $20 (assuming CREDIT and negative amount transactions are not being selected 
• $2,500+$20 = $2,520/5 = $504
• Yield five 5 ranges in increments of $504

Questions for Programming:  

1. Is the program selecting $0 dollar transactions?
2. Is the program selecting transactions with negative amounts, including CREDIT transactions?
3. For monetary scores to be accurate, the system should include all transactions.