RFM (Recency, Frequency and Monetary) KPIs can be key to any business for understanding customer behavior. Whether it is in the retail sector for tracking customer purchases, or in financial institutions tracking customer transactions, RFM scores and resulting KPIs can be the simplest, yet the most practical approach in getting more insight into customer analytics.
Generating RM scores versus RFM is even simpler and can be as sufficient in some cases, as this allows you to classify both customers and each transaction, purchase or customer visit individually.
Clustering of customers and transactions or purchases (see adjacent figure) can allow one to see significant patterns. RM can be specified as categorical or continuous, which, by itself, can contribute to different clusters identified.