Recency Frequency and Monetary Value Project

In this RFM project for ATX Outerwear, we segmented 96,551 customers using Recency, Frequency, and Monetary value to identify the most profitable groups. A random sample of 9,565 customers received a catalog, and we observed a 2.38% buy rate. To break even on mailing costs, a 1.54% response rate was required. For the full rollout to 86,947 customers, we projected that 2,072 would make a purchase, yielding an expected profit of $38,205. However, by targeting 53,758 customers based on the test market’s RFM segmentation, the expected profit increased to $53,893. This analysis helped us prioritize high-value customers and optimize the mailing strategy for improved profitability.