Measurement
RFM (recency, frequency, monetary)
RFM is a segmentation method that scores customers on how recently they purchased, how often they purchase and how much they spend.
It is old, simple and still among the most predictive segmentations available for retail, because recency in particular is a strong indicator of whether someone will buy again.
Its main use is triage: the segments define who is worth a win-back, who is worth a loyalty offer and who should be left alone. Discounting a high-frequency recent buyer is margin given away to someone who was going to purchase regardless.