- What are the criteria for segmentation?
- How should the businesses from different sectors prioritize the segmentation criteria?
- How many customers are there in each customer segment?
- What are the strategies to target the customers from different segments?
- Loading the data
- Cleaning and Feature Engineering
- Segmentation of the customers
- Visualization of the findings
- Segment Analysis and building strategies
- Pandas
- NumPy
- Seaborn
- Matplotlib
Distribution of features and segment
Here, these scatterplots show the correlation between the columns; Frequency is positively correlated with Monetary, negatively correlated with Recency, Recency is negatively correlated with Monetary and Frequency, Monetary is positively correlated with Frequency, negatively correlated with Recency.
As a result of the analysis, there are 3 main customer segments; Diamond,Gold,Silver. General profile of a customer is as following:
Diamond - The most valuable segment is this one. The business's profitability would suffer greatly if these consumers were lost. These customers' actions indicate that they are content with the product's quality, pricing, and other aspects. Therefore, in order to strengthen the relationship even further, customers from this sector should receive promotions that go above and beyond the norm. Giving new productions early access and including them in the business' decision-making processes are two examples.
Gold - This group is content with how the firm is run, but there are still a few small things that could be done better. Some could exhibit comparatively low frequency, while others might have modest purchasing volumes. Finding the improvable component and coming up with remedies are essential. For instance, if the frequency is low, it would be a good idea to analyze comparable products on the market because low frequency typically indicates that the buyer occasionally purchases goods from other brands.
Silver - Silver customers are the hardest segment to regain. To build the relationship, try fresh price lists, discounts, and accessibility alternatives. As an illustration, if the issue is high recency, it is a fantastic approach to reach out to the clients with new deals and promotions to encourage them to return to their regular habit. The cost of retention is significant for this market. To keep them, additional time, money, and effort are needed. Spending money on this section is not always profitable. Only if increasing profitability is not a top concern and the goal of the company, should this market niche be pursued. To find out why they avoided the merchandise, low cost activities should be chosen.