Customer's life-time value using the RFM model in the banking industry: a case study Online publication date: Wed, 29-Apr-2015
by Esmaeil Nikumanesh; Amir Albadvi
International Journal of Electronic Customer Relationship Management (IJECRM), Vol. 8, No. 1/2/3, 2014
Abstract: The customer's life-time refers to the relationship between the customer and the organisation in which the organisation can achieve more profit from its customer. The RFM model is based on three variables: recency, frequency, and monetary. The methodology of the present paper is to review the databases of Agricultural Bank of Iran, to review the literature, and to interview with experts using questionnaires. Parameters of the RFM model are limited to five variables in three areas of recency, frequency, and monetary value. Variables are weighed using experts' judgements. The number of data records of customers, 12,359, is then classified into 852 special, 1755 major, and 9373 normal classes through applying a clustering method. In addition, customers are segmented into eight groups by the distance to mean of the three parameters of the model. The results show that the normal customers who form 80% of the total customers have the lowest profitability.
Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Electronic Customer Relationship Management (IJECRM):
Login with your Inderscience username and password:
Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.
If you still need assistance, please email subs@inderscience.com
Our Blog 
Follow us on Twitter 
Visit us on Facebook