Repeat Transaction Frequency and Customer Lifetime Value
Most e-commerce technology is able to save transaction history in real-time and create customer database
that valuable to be analyzed for creating CRM and marketing strategy. In database marketing and direct
marketing, it is common to use RFM (recency, frequency, monetary) to analyze customer value [30].
Among RFM variables, recency is considered as the most powerful predictor for future customer behavior
[31]. Past study also shows that customers’ response rate vary the most by their recency, followed by their
frequency and monetary value [32]. Lower recency drives to lower switch probability by the customers
[33]. When the customer switch is low, it means customer retention measured by number of transaction
frequency will be high. Relationship duration has direct effect to customer profitability [34].