RFM segmentation is a marketing technique used to categorize customers based on their past purchasing behavior. RFM stands for Recency, Frequency, and Monetary value, which are the three key factors used to group customers into segments. Recency refers to how recently a customer has made a purchase, Frequency measures how often a customer makes purchases, and Monetary value reflects the amount of money a customer spends. By segmenting customers using RFM, businesses can better understand their customers’ buying patterns and tailor their marketing strategies accordingly. This allows for more targeted and effective communication with customers, leading to increased customer retention and loyalty.