3.2 RFM Analysis — price sensitivity
Price sensitivity is measured from behaviour, not opinion. For every product a customer has bought more than once, each price change is paired with what they did next. Buying less after a rise, or more after a cut, counts as a sensitive reaction; the score is the share of reactions that were sensitive.
| Band | What it means |
|---|---|
| Price Insensitive | Price moves; they carry on. |
| Price Tolerant | Mostly unmoved. |
| Moderate | Reacts about as often as not. |
| Highly Sensitive | Usually reacts. |
| Often Stop | A rise frequently ends the purchase altogether. |
| Insufficient Data | Not enough repeat buying through a price change to say — an absence of evidence, not a finding. |
Read it beside the other three
A Best-on-Monetary customer who is Highly Sensitive is a different proposition from one who is Price Insensitive. The first is the account to protect with a held price; the second can usually carry a rise.