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