Explore how purchase frequency and monetary value reveal a heavy‑tail distribution in customer value. Use RFM ideas to prioritize segments and improve lifetime value decisions.
The Pareto principle in customer revenue implies that a small share of customers often drives a ______ share of revenue.
fixed 50%
disproportionately large
declining
perfectly even
In RFM, customers with high frequency and high monetary value are usually ______.
lowest priority because they already buy
priority segments for VIP treatment and retention offers
only useful for prospecting new logos
best suppressed from all marketing
For CLV modeling, monetary value is best measured as ______ per order.
nominal list price
gross revenue including taxes and refunds
impressions served
contribution margin (revenue minus variable costs)
Purchase frequency distributions are commonly heavy‑tailed. A practical visualization trick is to ______.
plot monetary and frequency on log or rank scales
only use linear scales with fixed max
drop extreme values entirely
bin everything into two buckets only
A simple CLV framework multiplies expected orders by ______.
engineering hours
expected contribution per order
ad impressions per session
payment gateway fees only
BG/NBD‑style models typically need which observed signals?
session duration and bounce rate only
device model and IP address
recency and frequency of transactions in a calibration window
full credit history and income
To avoid overstating value for big‑ticket one‑timers, an analyst should segment by ______.
monetary value only
site traffic volume
average order value alone
frequency AND monetary value together (R and F/M jointly)
When summarizing monetary value across customers, a robust choice that reduces outlier impact is ______.
a random single example
the maximum observed order value
a trimmed mean or median of contribution per order
an unweighted simple sum
A practical way to target Pareto‑heavy segments without eroding margin is to ______.
suppress communication to top spenders
offer access or exclusives instead of blanket discounts
deepen site‑wide discounts for all users
reward only first‑time buyers
For forecasting revenue from top deciles, a stable practice is to ______.
fit models without holdout validation
track decile shares over time and watch for mix shifts
ignore seasonality and promotions
assume the top decile is always exactly 10% of revenue
Starter
Good start—review definitions and formulas, then retake the quiz.
Solid
Nice work—tighten the gray areas to turn insights into action.
Expert!
Outstanding—you can apply these concepts to real revenue decisions.
