A review of the application of RFM model

RFM (Recency, Frequency and Monetary) model has been widely applied in many practical areas in a long history, particularly in direct marketing. By adopting RFM model, decision makers can effectively identify valuable customers and then develop effective marketing strategy. This paper aims to provide a comprehensive review on the application of RFM model. In addition, this paper depicts the definition and the scoring scheme of RFM and summarizes how RFM model has been effectively applied in a wide variety of areas. Furthermore, this paper presents the advantages and disadvantages of the RFM model. The relative advantages and disadvantages of RFM and other models are also exploited. Finally, this paper describes the extended RFM model via a presentation of how RFM combines with other variables and models.