Estimating travellers’ value when purchasing auxiliary services in the airline industry based on the RFM model

The recency/frequency/monetary value (RFM) segmentation framework remains a mainstay in the retailing industry to quantify consumer values. However, the RFM model does not consider the added value travelers ascribe to auxiliary services. We extend the RFM framework to an RFM-P model by considering the likelihood of purchasing ancillary services during travel (P). We proposed four traveler groups based on the RFM-P model using unique sales data provided by Chinese airline. The four customer groups were compared through the lens of personal and scenario characteristics to estimate travelers’ purchasing behaviours in airlines. The results help managers make market decisions and fill gaps left by consumer value theory and the RFM model in the retailing industry.