ABSTRACT
The RFM model is an important method in customer importance evaluation. However, there are some shortcomings in traditional crisp RFM models. To overcome these shortcomings, a fuzzy set approach is proposed. Firstly, the formula for calculating the R, F, and M scores as well as that for calculating the RFM total score are fuzzified, and a customer’s importance is now evaluated with a more reasonable fuzzy value instead. Secondly, a formula for calculating the fuzzy weighted RFM total score is also proposed to deal with the situation in which R, F, and M are considered unequally important. After screening out unimportant customers with low fuzzy (weighted) RFM total scores, the Fuzzy C-means approach is applied to cluster important customers, so as to establish different marketing strategies. A demonstrative example is given. Advantages of the fuzzy set approach over traditional methods are then concluded.
