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Customer Segmentation Project

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14 views13 pages

Customer Segmentation Project

Uploaded by

aryansharmaa421
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Customer Segmentation Using RFM

Analysis

By-Arjun Raghav
Objective :
• The primary objective is to maximizing the

secondary sales based on customer’s behavior in


the last FY 2022-23.
How to do it :
• studying our customers behavior based on sale
trend analysis
• Segmenting each customer into unique behavioral

classes using behavioral modelling (RFM model).


Sale trend Analysis
First we will analyze how our revenue
trends against different factors that
can impact the sale

Prescriptions
for Customer
Behavior
Model
Customer Behavior
Model-RFM
REVENUE AND REVENUE GROWTH RATE
GRAPH
Revenue REVENUE GROWTH
RATE

• We can see that revenue is decreasing in 2022-MAY,2023-APR while revenue


growth rate is increasing
• We can see that revenue is increasing in 2022-OCT while revenue growth rate
is decreasing
• revenue dropped significantly in 2022-JUNE -2022-AUGUST but revenue
growth rate didn’t dropped as such.
REVENUE AND RETENTION RATE

Revenue Retention Rate

• In 2022-JUNE and 2023-APR revenue decreased but retention rate went up


• In 2022-NOV revenue increased but retention rate went down
• From 2022-SEPT – 2022-DEC revenue increased to its peak but retention rate was
not that significant
• In 2022-DEC revenue falls drastically but retention rate didn’t fall to that extent
REVENUE AND NEW CUSTOMERS

Revenue New Customer

• In new customers graphs trend line there is an significant decrease in the 2022-MAY
but the downfall is not that significant in revenue
• from 2022-AUG - 2022-DEC there’s no net change in the new customers graph but
revenue was generated the most in this period.
• Our new customers graph goes upwards in 2023-MAR – 2023-MAY but revenue
graph shows a downfall .
• New customers visited max in (2023-JAN - 2023-MAY).
RMF ?
RFM stands for recency, frequency, monetary value
1. Recency: Recency refers to how recently a customer made a purchase,
helping identify their engagement level and potential interest.
2. Frequency: Frequency represents the number of times a customer made a
purchase, indicating their loyalty and engagement with the brand.
3. Monetary: Monetary refers to the total amount of money a customer spent
on purchases, indicating their value and profitability to the business.
CUSTOMER CATEGORIZATION

We got a total score and based on that we further


categorized our customers as-
• High value customer- These are doing excellent in
their Recency Frequency as well as in monetary vales
• Potential/loyal customers- customers with best
recency values but low frequency and monetary
value
• At-Risk customers- These customers have good
monetary and frequency values but they have poor
recency
• Low value/Lost customers- These customers have
either gone extinct or They have very poor Recency,
Frequency, Monetary values.

Customer Category Count Fan Appl Sm


High value customers 37566 22343 19259 2788
Loyal customers 16514 10187 8302 870
At-Risk customers 22173 13205 14322 1847
Low value/Lost customers 55992 32136 32055 3346
Total= 132245 77871 73938 8851
Overall scores
Recency frequency monetary
index Customer-ID score score score score category

1 100315-11438 1 2 2 5 High value

2 100315-5865 2 2 2 6 High value

3 100315-10999 2 1 1 4 Loyal customers

4 100315-0887 2 0 1 3 Loyal customers

5 100315-10977 0 2 2 4 At-risk

6 100315-10982 1 1 1 3 At-risk

7 100315-5397 0 0 0 0 Low value/Lost

8 100315-0892 1 0 0 1 Low value/Lost


Fans Scores
Recency frequency monetary
index Customer-ID score score score score category

1100315-6968 1 2 2 5 High value

2100315-7019 2 2 2 6 High value

3100315-0887 2 0 1 3 Loyal customers

4100315-10999 2 1 1 4 Loyal customers

5100315-10977 0 2 2 4 At-risk

6100315-10982 1 1 1 3 At-risk

7100315-10367 0 0 0 0 Low value/Lost

8100315-10381 0 1 1 2 Low value/Lost


Appliance Scores
Recency frequency monetary
index Customer-ID score score score score category

1100315-4915 1 2 2 5 High value

2100315-5865 2 2 2 6 High value

3100315-7129 2 0 1 3 Loyal customers

4100319-0705 2 0 2 4 Loyal customers

5100315-10503 1 1 1 3 At-risk

6100315-11331 0 1 2 3 At-risk

7100315-0892 1 0 0 1 Low value/Lost

8100315-10366 0 0 0 0 Low value/Lost


Sewing Machine Scores
Recency frequency monetary
index Customer-ID score score score score category

1100491-0901 2 2 2 6 High value

2100491-0926 2 2 2 6 High value

3100491-3583 2 0 2 4 Loyal customers

4100491-5941 2 1 1 4 Loyal customers

5100491-1156 1 1 1 3 At-risk

6100491-1159 1 1 2 4 At-risk

7100485-0724 0 0 0 0 Low value/Lost

8100485-0725 1 0 0 1 Low value/Lost


PRESCRIPTIONS FOR CUSTOMER
CATEGORIES

• High value customers


• Increase monetary value
• Personalized communication, loyalty programs, special offers, exclusive discounts, early access to
new products or features, and exceptional customer service can be provided .

• Loyal Customers
• Increase frequency as well as monetary values
• We should also give them incentives so they can increase their spending limit

• At-Risk customers
• increase monetary values
• Implement customer retention initiatives that specifically target the "at_risk" segment. This can
include proactive customer service, personalized support, loyalty programs, or exclusive benefits
to encourage them to stay engaged and loyal to your business

• Low value / Lost Customers


• Increase frequency , monetary and recency
• This can be done if sales team interacts directly with these customers

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