Set up RFM analysis [AX 2012]
Updated: February 25, 2014
Applies To: Microsoft Dynamics AX 2012 R3
This topic explains how to set up a Recency, Frequency, and Monetary (RFM) analysis of your customers. RFM analysis is a marketing tool that your organization can use to evaluate the data that is generated by customer purchases. After you set up RFM analysis, customers are assigned a calculated RFM score as they make purchases. The RFM score can be a three-digit rating or an aggregate number, depending on how your organization has configured RFM analysis.
If your organization uses the three-digit rating, the first digit is a rating of the recency of a customer purchase. The second digit is a rating of the frequency with which the customer makes purchases from your organization. The third digit is a rating of the monetary amount that the customer spends when they make purchases from your organization. For example, a customer might have a rating of 535. If your organization has set ratings on a scale of 1 to 5, with 5 being the highest, this rating tells you the following about the customer:
-
Recency score of 5 – The customer made a purchase recently.
-
Frequency score of 3 – The customer purchases products from your organization with moderate frequency.
-
Monetary score of 5 – When the customer makes a purchase, they spend a significant amount of money.
If your organization uses an aggregate of the numbers, the scores are added together. In this case, the same customer would have a rating of 13 (5 + 3 + 5).
Use this procedure to set up RFM analysis for the customers in your organization.
-
Click Call center > Periodic > RFM analysis.
-
In the RFM analysis, click New, and then, in the RFM definition field, enter a name for the RFM definition. For example, you could call the definition RFM-A.
-
Enter a start and an end date for this RFM definition.
-
On the General FastTab, do the following:
-
If each section of the RFM score must contain an equal count of customers, select the Even distribution check box.
-
Select the Add scores check box to aggregate the three scores. This, for example, would give a customer an RFM score of 13 instead of 535.
-
Select the Save history check box to require Microsoft Dynamics AX to save the statistical data for customers so that the data can be used to calculate the RFM score.
-
-
On the Recency FastTab, do the following:
-
In the Divisions field, enter the number of divisions, or groups, that will be used to calculate the recency score for customers. For example, if you have 100 customers, a division of 5 means that there are 20 customers for each score. The 20 customers who have made purchases most recently have a recency score of 5. The next 20 customers have a recency score of 4, and so on. If you have 50 customers, 10 customers have a recency score of 5, 10 have a recency score of 4, and so on.
-
In the Priority field, select how much weight to give the recency parameter in relation to the other parameters when the RFM score is calculated for a customer. For example, you might place more value on the recency score than the monetary score.
-
In the Multiplier field, enter the value by which to multiply the recency score. If you do not enter a value, the score will not be multiplied.
-
In the Period field, select the time period by which the recency score is calculated. For example, by week or by month.
-
-
On the Frequency FastTab, do the following:
-
In the Divisions field, enter the number of divisions, or groups, that will be used to calculate the frequency score for customers.
-
In the Priority field, select how much weight to give the frequency parameter in relation to the others when the RFM score is calculated for a customer.
-
In the Multiplier field, enter the value by which to multiply the frequency score. If you do not enter a value, the score will not be multiplied.
-
-
On the Monetary FastTab, do the following:
-
In the Divisions field, enter the number of divisions, or groups, that will be used to calculate the monetary score for customers.
-
In the Priority field, select the priority select how much weight to give the monetary parameter in relation to the others when the RFM score is calculated for a customer.
-
In the Multiplier field, enter the value by which to multiply the monetary score. If you do not enter a value, the score will not be multiplied.
-
In the Gross/net field, select whether the customer’s monetary score should be calculated by using the gross or net invoice amount.
-
If a customer’s return amounts should be subtracted from the customer’s total invoice calculation, select the Subtract returns check box.
-
Announcements: To see known issues and recent fixes, use Issue search in Microsoft Dynamics Lifecycle Services (LCS).