Customer Analysis: Ajax Inc. RFM Score

What is the RFM score of Ajax Inc.?

Is it most likely to have a score of 511?

Answer:

False, its score should be 155.

In the provided scenario, Ajax Inc. would have an RFM score of 155, not 511. To understand why, we need to break down the RFM analysis.

RFM analysis evaluates customers based on three key factors: recency, frequency, and monetary value. Customers are then assigned a score from 1 to 5 for each of these factors, with 5 being the most desirable or valuable.

For Ajax Inc., the analysis would result in the following scores:

• Recency: 1 - as Ajax has not placed any orders recently.
• Frequency: 5 - because when Ajax did order linen in the past, it did so frequently.
• Monetary Value: 5 - Ajax's orders were of the highest monetary value.

Therefore, the correct RFM score for Ajax Inc. based on the provided information is 155. This reflects the customer's behavior and value to the linen manufacturing company.