The RFM Formula in Direct Marketing

The answer to the ?Test Your Direct Marketing I.Q.? quiz (see below) is (a). When someone makes a donation, you should send a solicitation asking for more money as soon as possible ? ideally, that same day or the next day.

To me, that?s counterintuitive: I?d think that if Joe just gave us money, he would be tapped out and want to wait awhile before giving us more. But testing shows that the opposite is true, and has allowed direct marketers to develop the RFM formula, which stands for recency, frequency, and monetary.

RFM says:

* Recency — the person who bought (or donated) the most recently is the most likely to buy (or donate) again.

* Frequency — the person who buys frequently is more likely to buy again than the person who buys infrequently.

* Monetary — the person who spent the most money is more likely to buy again (and will spend more) than the person who spent less money.

There are very few rules that hold in DM, but RFM is one of them. It is nearly a universal truth, with virtually no exceptions.

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