In the RFM model, which describes segmentation approach?

In the RFM model, which describes segmentation approach?

• A. It tracks daily website visits.
• B. It creates clearly defined segments to target in different ways.
• C. It measures ad impressions.
• D. It predicts stock prices.

Answer: (B)

RFM groups customers by three purchase behaviors—how recently they bought, how often, and how much they spend. This setup lets you create clearly defined customer segments and plan different marketing actions for each group. By distinguishing top customers who buy frequently and spend a lot from those who haven’t purchased in a while or spend less, you can tailor messages, offers, and retention tactics to each segment, which is the essence of the segmentation approach in RFM. The other options describe metrics that aren’t about dividing customers into targeted groups: daily visits measure site engagement, ad impressions measure advertising reach, and predicting stock prices is unrelated to customer segmentation.

RFM groups customers by three purchase behaviors—how recently they bought, how often, and how much they spend. This setup lets you create clearly defined customer segments and plan different marketing actions for each group. By distinguishing top customers who buy frequently and spend a lot from those who haven’t purchased in a while or spend less, you can tailor messages, offers, and retention tactics to each segment, which is the essence of the segmentation approach in RFM.

The other options describe metrics that aren’t about dividing customers into targeted groups: daily visits measure site engagement, ad impressions measure advertising reach, and predicting stock prices is unrelated to customer segmentation.