This project aims to develop a heuristic approach that can effectively identify global optimal centroids, enabling precise customer segmentation based on Recency, Frequency, and Monetary attributes. The proposed method seeks to overcome challenges related to noise, outliers, and cluster density variations, ultimately yielding meaningful and interpretable customer segments. By comparing the performance of the proposed approach with traditional clustering techniques, the study aims to showcase the advantages of its innovative methodology in addressing the customer segmentation problem.
- Cluster 4 - Top-Tier Customers
Given their high recent purchases, buying frequency, and monetary value, these customers represent a lucrative segment. The company should focus on nurturing their loyalty through personalized engagement. Offering exclusive rewards, premium services, and early access to new products can incentivize them to continue making frequent purchases, further boosting their contribution to the company's revenue.
* Cluster 3 - Infrequent Purchasers
To convert this sizable segment into regular customers, the company needs to devise strategies that encourage repeat purchases. Implementing a targeted email marketing campaign featuring relevant product recommendations, special offers, and reminders could re-engage these customers and prompt them to make more frequent purchases, thereby increasing their contribution to the company's revenue stream.
* Cluster 2 - High-Value Infrequent Visitors
While these customers exhibit high monetary value, their infrequent visits indicate untapped potential. The company can introduce loyalty programs or membership tiers, providing exclusive benefits to incentivize more frequent engagement. By nurturing their loyalty, the company can ensure a consistent stream of revenue from this valuable segment.
* Cluster 1 - New and Infrequent Buyers
This segment can be cultivated through personalized onboarding and engagement strategies. The company should introduce special promotions for first-time buyers and provide clear incentives for them to continue purchasing. Creating a seamless and positive initial experience can foster loyalty and encourage these customers to become more frequent buyers, thereby contributing to revenue growth.
* Cluster 0 - Frequent Buyers with Low Recency
To prevent losing these customers to competitors, the company should deploy targeted retention campaigns. Sending tailored offers, reminding them of new arrivals, and utilizing social media platforms can reengage this segment and encourage them to make more recent purchases, thereby sustaining their contribution to the company's revenue.