A New Perspective on RFM Analysis

Abstract

The aim of this chapter is proposing a novel integrated Fuzzy Group Multiple Attribute Decision Making (FGMADM) and Fuzzy C-Means Clustering (FCM) as a DM tool for segmentation of customers (retailers), based on an updated RFM model. For this purpose, the most important criteria to evaluate retailers from the in depth literature survey and experts' opinion are added to the traditional RFM model. In addition, in order to make the model more efficient, FGMADM approach, in this paper, Fuzzy Group Step-wise Weight Assessment Ratio Analysis (FGSWARA) is used to weight KPIs. Then, FCM is applied to segment customers, based on their purchase behavior (RFM scores). A case study in one of the most famous Fast Moving Consumer Goods (FMCG) companies in Iran illustrated the applicability of the proposed model.