Sense Respond Adjust

The sensing is done through using technology to monitor visits to particular content on a web site or clicking on particular links in an e-mail. Purchase history can also be monitored, but since purchase information is often stored in a legacy sales system it is important to integrate this with systems used for communicating with customers. The response can be done through messages on-site, or in e-mail and then adjustment occurs through further sensing and responding.

This 'sense and respond' technique has traditionally been completed by catalogue retailers such as Argos or Littlewoods Index using a technique known as 'RFM analysis'. This technique tends to be little known outside retail circles, but e-CRM gives great potential to apply it in a range of techniques since we can use it not only to analyse purchase history, but also visit or log-in frequency to a site or online service and response rates to e-mail communications.

Recency Frequency Monetary value (RFM) analysis

RFM is sometimes known as FRAC, which stands for: Frequency, Recency, Amount, (obviously equivalent to monetary value), Category (types of product purchased - not included within RFM). We will now give an overview of how RFM approaches can be applied, with special reference to online marketing. We will also look at the related concepts of latency and hurdle rates.

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