Unsupervised Learning Framework for Customer Requisition and Behavioral Pattern Classification

Udoinyang G Inyang,Aliu M Bolanle,Okure O Obot,Moses E Ekpenyong

doi:10.5539/mas.v11n9p151

Abstract

Maintaining healthy organization-customers relationship has positive influence on customers’ behavioral tendencies as regards preference to products and services, buying behavior, loyalty, satisfaction, and so on. To achieve this, an in-depth analysis of customers’ characteristics and purchasing behavioral trend is required. This paper proposes a hybrid unsupervised learning framework consisting of k-means algorithm and self-organizing maps (SOMs) for customer segmentation and behavior analysis. K-means algorithm was used to partition the entire input space of customers’ transaction dataset into 3 and 4 disjoint segments based on customers’ frequency (F) and monetary value (MV). SOM provided visualization of the underlying clusters and discovered customers’ relationships in the dataset. Interaction of F and MV clusters resulted in 12 sub-clusters. An in-depth analysis of each sub-cluster was also performed and appropriate customer relationship management (CRM) strategies established for each sub-cluster. Discovered knowledge will guide effective allocation of resources to each customer cluster and other organizational decision support functions much required by CRM systems.

Highlights

Customer Relationship Management (CRM) is at the core of any organization’s business strategy
Operational CRM involves aspects where contacts are made with the customers and aims at harnessing information technology (IT) techniques and resources for organizational business decision support
The Silhouette value for each data point is a measure of how similar a cluster point is to other points in its own cluster

Summary

Introduction

Customer Relationship Management (CRM) is at the core of any organization’s business strategy. It describes the process of acquiring, retaining and cooperating with selected consumers to create superior value for the organization and customers. CRM involves the cross-functional integration of processes, people, services, operations and marketing capabilities, enabled through information technology (IT) and applications. The fundamental purpose of focusing CRM efforts on customers’ retention is to ensure that the organization maintains relationship with value-adding customers. CRM functions basically include, operational, analytical and collaborative CRMs (Jelonek, 2006). Operational CRM involves aspects where contacts are made with the customers and aims at harnessing IT techniques and resources for organizational business decision support. Collaborative CRM guarantees that customer related information/knowledge acquired and stored within the organization are available to every unit/department of the organization

Methods

Results

Conclusion