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.

  1. Click Call center > Periodic > RFM analysis.

  2. 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.

  3. Enter a start and an end date for this RFM definition.

  4. 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.

  5. 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.

  6. 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.

  7. 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.

If you don't have access to the pages that are used to complete this task, contact your system administrator and provide the information that is shown in the following table.

Category

Prerequisite

Configuration keys

Retail

Security roles

Customer service manager

RFM validation scores and history

Announcements: To see known issues and recent fixes, use Issue search in Microsoft Dynamics Lifecycle Services (LCS).

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