Abstract
In this study, we present an RFM model to establish a customer segmentation strategy at a Korean duty-free shop. In this shop, customers’ visiting time and purchase amount are restricted by the government, so that a different purchase pattern from general retail distribution business is exhibited. At the shop, recency demonstrated normal distribution, but visiting frequency and purchase amounts showed a division between a small number of top-class customers and a multitude of bottom-class customers. Here, classes were identified through a normalization process involving the characteristics of visiting frequency and purchase amount among duty-free shop customers. Based on the result, an RFM model was developed, and RFM scores were allocated to customers who had bought goods at the duty-free shop in past five years. Through this process, a customer relationship management strategy was developed.
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