RFM: A Simple and Powerful Approach to Event Modeling

This post is by Gal Oshri, a Program Manager in the Data Group at Microsoft. RFM is a simple and intuitive technique for segmenting customers and has been used by marketers for decades. RFM also has surprising value in machine learning applications despite its simplicity. This blog post describes how a generic technique has allowed us to come within 1% accuracy of winning solutions in various ML competitions, such as placing in the top 30 entries of the KDD Cup 2015 and getting a boost of 502 positions on the leaderboard of an AirBnB Kaggle competition. RFM has been widely used in direct marketing and database marketing for identifying the customers who are most likely to respond or make a purchase [1].