Customer Segmentation with RFM
Business Problem
Analyzing the given transactional data to understand our customer demographic as well as their purchase preference to create various business strategies.
Data
Invoice - Invoice Number of the purchase
StockCode - Code of the item purchased
Description - Description of the item purchased
Quantity - Number of items purchased
InvoiceDate - The date of invoice issue
UnitPrice - Price of a single item
CustomerID - Unique customer ID
Country - Country name
Strategy
Created customer segements based on RFM (Recency, Frequency, Monetary) analysis which is a technique that uses past purchase behavior to divide customers into groups. RFM helps divide customers into various categories or clusters to identify customers who are more likely to respond to promotions and also for future personalization services.
RECENCY (R): Days since last purchase
FREQUENCY (F): Total number of purchases
MONETARY VALUE (M): Total money this customer spent.
What business problem we can solve?
- Sending customized mails and offers as per spend
- Solving customer attrition
- Offers as per seasonal buy