Customer Segmentation in Python

Transcript

1. Customer Segmentation in Python
2. Objectives Learn about customer segmentation RFM Key Metric How to Segment using KMeans Behavior segmentation CUSTOMER SEGMENTATION IN PYTHON
3. What is Customer Segmentation? Segmentation means grouping entities together based on similar properties. Entities could be customers, products, and so on. Customer Segmentation means grouping customers based on similar properties. For example, segmenting customers based on their age (age group). CUSTOMER SEGMENTATION IN PYTHON
4. Types of Customer Segmentation Demographic Segmentation Behavioral Segmentation. Geographic Segmentation. Psychographic Segmentation. Technographic Segmentation. Needs-based Segmentation. Value-based Segmentation. CUSTOMER SEGMENTATION IN PYTHON 1 1DEMOGRAPHIC SEGMENTATION
5. Behavioral SEGMENTATION Behavioral segmentation is a sort of customer segmentation in which consumers are grouped based on how they behave or interact with the company. Behavior segmentation is more important than demographic segmentation since it facilitates more effective marketing campaigns because it is more relevant to the business. CUSTOMER SEGMENTATION IN PYTHON
6. RECENCY, FREQUENCY, MONETARY (RFM) There are a lot of metrics you can use in behavioral segmentation, but since we are talking about products the most common metric used is the RFM metric. Recency indicates how recently a customer has purchased from the company. It is used to determine churned customers. Frequency refers to how frequently a customer purchases from the company. CUSTOMER SEGMENTATION IN PYTHON
7. Monetary determines how much money a customer has spent on the company. When working with this type of metric the features you will most like work with are date features(like order_date), invoice or order_id, and Amount Spent features. How all these are calculated will be shown in the coding part. RECENCY, FREQUENCY, MONETARY (RFM) CUSTOMER SEGMENTATION IN PYTHON
8. Let's Code