RFM Model (Recency, Frequency, Monetary Value)

Description
To estimate the value of a customer this is probably the simplest model you will find. Despite its simplicity, its also known for its reliability which is based upon three things:

-Recency: the more recently the transaction has taken place, the more likely the client is to accept a further interaction

-Frequency: the customer's value increases the more that customer buys from the company

-Monetary value: the customer's total value also depends on the amount of money they have spent within a given time period

Generally, the above variables are converted into comparable indicators and summed to attain a total value indicator. Different weights can also be defined for each indicator.