Clustering for Business People
In many situations, a business requires to simplify the customer base by excerpt some typical representatives [i.e. segments or clusters] that, put together, describe approximately the main trends within a customer base. More than any other, Marketing departments need it to understand: Trends (what segments are growing/shrinking) Customer LifeCycle (Do I recruit the same customers?) What are the shopping/behavioral/spending/channel habits of my customers? Who is the most profitable group of customers (is it a function of my Marketing Spend?) Where are the Marketing dollars spend? Is it a good investment In brief, at a high-level, understanding the interactions between customers and the Brand The Analytics to tackle the issue are pretty simple conceptually. Yet, it is easy to get lost between all the techniques available. Let's make a rundown on what's out there. Overview: Family Name Description Use Drawback Upside Partitional Clustering K-mean