Project Summary
Customer segmentation is the practice of dividing a customer dataset into groups of similar individuals by age, gender, interests, and spending habits. Companies also try to understand what each segment finds most valuable to use their marketing materials more accurately according to that segment and develop marketing strategies accordingly.
Every company has billions or trillions of data. However, when the data is transformed into meaningful information with the help of statistical analysis, it is possible to take action. Recognizing the customer and knowing their needs of a business is a very important factor for more effective marketing. For this reason, data science plays a very important role in analyzing billions and even trillions of customer data and drawing meaningful results.
Customer segmentation is also a method used to understand who buys and will buy the services or products of the business from these billions of flowing data.
Project Overview: Utilized Python to perform customer segmentation using hierarchical clustering to identify distinct groups of customers based on their behaviors or attributes. This segmentation helps businesses tailor marketing strategies, improve customer service, and enhance overall business performance.
- DELIVERABLES
- Utilized Python to conduct a comprehensive customer segmentation analysis using hierarchical clustering techniques to uncover distinct customer groups and behaviors.
- Collected and preprocessed a diverse dataset including customer demographics, purchase history, and behavioral data to ensure high-quality input for analysis.
- Utilized hierarchical clustering algorithms, including agglomerative and divisive approaches, to identify and group customers based on similarity metrics.
- Determined the optimal number of clusters using methods such as the dendrogram analysis, silhouette scores, and gap statistics to ensure meaningful segmentation.
- Developed a script that can be applied in business ad to achieve a more efficient campaign by focusing on a targeted group of customers based on their annual income and spending scores.
- ANALYSIS IMPACT
- The hierarchical clustering project successfully segments customers based on their attributes, providing valuable insights into different customer groups. By leveraging these insights, businesses can tailor their strategies to enhance customer satisfaction and drive growth.