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Suppose you work for an online sporting goods retailer. You’ve been hired as a business analyst...

Suppose you work for an online sporting goods retailer. You’ve been hired as a business analyst with the task of increasing sales. Describe how you could use RFM and market-basket analysis to increase the sales of sporting goods. If used effectively, how could RFM and market-basket analysis affect customer satisfaction?

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Answer #1

RFM can be used to find out to find the following information about the customers:

1. The frequency of his purchase

2. Recency(last purchase) of his purchase.

3. Total amount of his purchase till date.

Market basket analysis gives information about the combination of the purchases that go well or the combination of the purchases which have highest correlation between them.

RFM and basket analysis helps in finding out how the customer behaves when it comes to making a purchase, what all did he bought together. How frequently he does a purchase. What is his favourite set of purchases.

Finally using the information available, we Can roll out specific offers corresponding to the specific set of customers in the definite product categories that are their's favourite.

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