As mentioned in ch1, there is increased use of customer databases for target marketing and customer retention programs. Database marketeers often use three main criteria for evaluating and segmenting customers in their databases.

1. Recency: How recently has the customer bought from you?
2. Frequency: How many different products does the customer buy and what are the time intervals?
3. Monetary value: What is the value of the customer's purchases in terms of profits?

This RFM method is used to rate customers in terms of attractiveness.