Chapter 3. Customer Analytics
Customer analytics is a process in which we use the data of customer behavior to derive the most important business decisions using market segmentation and predictive analytics. Market segmentation is the process of dividing the user base into subgroups based on their behavior and other types of shared characteristics. This will help companies in providing customized products for each user segment. The result of this kind of analysis will lead the company to grow their business in an effective manner. Companies also make more profit. There are a lot of advantages. I know this is only a brief discussion about market segmentation, but just bear with me for a while. I will give you all the necessary information in the upcoming sections.
Companies can use the result generated by market segmentation and predictive models for direct marketing, site selection, customer acquisition, and customer relationship management. In short, with the help of customer analytics, the company can decide the most optimal and effective marketing strategy as well as growth strategy. The company can achieve great results with a limited amount of marking expenditure. Customer analytics include various methods. You can refer to the names of these methods in the following diagram:
Figure 3.1: Variety of methods for customer analytics
In this chapter, we won't be covering all the methods given in the previous figure, but we will cover the methods that are most widely used in the industry. We will build a customer segmentation application. In this chapter, we will cover the following topics:
- Introducing customer segmentation:
- Introducing the problem statement
- Understanding the datasets
- Building the baseline approach for customer segmentation:
- Implementing the baseline approach
- Understanding the testing matrix
- Testing the result of the baseline approach
- Problems with the baseline approach
- Optimizing the baseline approach
- Building the revised approach for customer segmentation:
- Implementing the revised approach
- Testing the revised approach
- Problems with the revised approach
- Understanding how to improve the revised approach
- The best approach for customer segmentation:
- Implementing the best approach
- Testing the best approach
- Customer segmentation for various domains
- Summary
We will start with customer segmentation.