Direct Marketing Article
The RFM Formula
By Bob Bly
When I first got into direct marketing, I took a course in direct mail
copywriting with legendary copywriter Milt Pierce at New York University.
One day a student asked, "Professor Pierce, why is it that, as soon as I
give a donation to a charity, they immediately send me another letter asking
for more money?"
Milt replied: "Because they know, from experience, that the person who just
made a donation is the one most likely to give again."
Huh? This threw me. It seemed counterintuitive.
"But Professor Pierce, if I just gave money to a charity, then I would feel
I'd fulfilled my obligation for at least a while. And I might even be
annoyed that they are coming back to me asking for more."
"Nonetheless," Milt replied, "experience proves that the person who just
gave is the most likely to give again."
He explained that this phenomenon was called RECENCY, and it held for
commercial direct response as well as nonprofit, and that it was part of a
formula called "RFM" - for "recency, frequency, and monetary."
The first element, RECENCY, refers to how recently the person made a
purchase through direct response.
According to RFM, those who purchased the most recently are most likely to
This is why it's usually worth paying a premium to rent the "hotline" names
on any mailing list - the names of customers who have bought via mail order
within the last 12 months or so. The hotline names invariably outperform the
other names on the list, because of RECENCY.
The "F" in RFM is FREQUENCY - how often the customer buys.
Here, we know that the more often someone buys, the more responsive they are
to additional mail order offers.
This is why some mailing lists offer a selection called "multi-buyers,"
These are customers who have bought more than once. Invariably, multi-buyers
outperform the names of one-time buyers on the list.
The "M" in RFM is MONETARY - how much money the customer spends, or the size
of his average order.
Here, you want to look for mailing lists where the average order is in the
same range of your product's price.
Let's say you are selling a video program on "Overcoming Infertility: How to
Have a Child When You've Been Trying Without Success." The price is $99.
You rent a list of people who have subscribed to an infertility magazine for
$12. You mail to the list, and the mailing doesn't pull. Why not?
The problem is this: while the people on the list have demonstrated (a) an
interest in infertility and (b) that they buy information by mail, they have
NOT demonstrated that they will spend $99 in the mail. Twelve dollars, yes;
ninety-nine dollars, no.
The solution? Find a list of people who have, say, attended a workshop on
infertility or bought a test kit via mail order for $100. This might work,
because not only do you know that the people on the list are mail order
buyers and interested in infertility, but they have demonstrated that they
will shell out a large amount of money for the right offer.
About the Author:
Bob Bly is an independent copywriter and consultant with more than 25 years
of experience in business-to-business, high-tech, industrial, and direct
marketing. He has written copy for over 100 clients including Network
Solutions, ITT Fluid Technology, Medical Economics, Intuit, Business & Legal
Reports, and Brooklyn Union Gas...and has won numerous industry awards. Bob
is the author of more than 70 books including The Complete Idiot’s Guide to
Direct Marketing (Alpha Books) and The Copywriter’s Handbook (Henry Holt &
Co.). Visit: www.BobBlyMarketingBooks.com