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/Predict Quarterly Sales with the RFM Model
Predict Quarterly Sales with the RFM Model
Learn how to predict quarterly sales using recency, frequency, and monetary analysis.
In this lesson, we’ll predict a customer’s quarterly spending from historical transactions. We’ll use the CDNOW dataset, which contains the historical online purchases of compact disks and applies the RFM (recency, frequency, and monetary) model to predict quarterly sales numbers.
Here are the details of the dataset.
Feature Details
Feature | Data Type | Details |
customer_id | Integer | Unique identifier of a customer |
date | String | Date and time of the transaction |
quantity | String | Quantity sold in a transaction |
price | Integer | Total sale amount |
RFM model
RFM model is a method used in marketing to analyze and segment customers based on their historical purchasing behavior. The three elements of the RFM model are:
Recency: How recently a customer made a purchase.
Frequency: The number of purchases made by a customer in a given time period.
Monetary: The total amount spent by a customer.
Data processing
First, let’s load the dataset and change the data type of the ...