It is the classic way to rank customers by value and likelihood to buy again. Recency is usually the strongest single predictor: someone who bought last month is far more likely to buy again than someone who bought last year.
For most brands a simple version is enough: a handful of named segments built from recency and order count, rather than a 125-cell grid nobody acts on.
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Related terms
- Customer segmentationCustomer segmentation is grouping customers by behaviour, such as how recently and…
- LTV (customer lifetime value)LTV is the total value a customer generates over their relationship with a…
- Repeat purchase rateRepeat purchase rate is the share of customers who place a second order within a…
Part of the growth marketing glossary by Shiva Sharma.