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Customer Segmentation Using Machine Learning

The document discusses using k-means clustering for customer segmentation. It explains what customer segmentation is, why k-means clustering is suitable, the process which includes data collection, analysis, visualization and identifying customer clusters.

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Minal Singh
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375 views28 pages

Customer Segmentation Using Machine Learning

The document discusses using k-means clustering for customer segmentation. It explains what customer segmentation is, why k-means clustering is suitable, the process which includes data collection, analysis, visualization and identifying customer clusters.

Uploaded by

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

Machine Learning

BY:
Khushboo Singh (2000290110081)
Kritika Jaiswal (20000290110082)
Minal Singh (2000290110090)
What is customer segmentation ?

• It simply means grouping your customers


according to various characteristics (for example
grouping customers by age).
• It’s a way for organizations to understand their
customers. Knowing the differences between
customer groups, it’s easier to make strategic
decisions regarding product growth and
marketing.
• The opportunities to segment are endless and
depend mainly on how much customer data you
have at your use.
Why use K-means clustering for
customer segmentation?
• K-means clustering is an unsupervised machine
learning algorithm. This algorithm is used when we
have unlabelled data. Unlabelled data means input
data without categories or groups provided. Our
customer segmentation data is like this for this
problem.

• The algorithm discovers groups (cluster) in the data,


where the number of clusters is represented by the K
value. The algorithm acts iteratively to assign each
input data to one of K clusters, as per the features
provided. All of this makes k-means quite suitable for
the customer segmentation problem.
The Required Python Libraries
• PANDAS
• NUMPY
• SEABORN
• MATPLOTLIB
• Ski-LEARN

Technology Used : Machine Learning


Tool Used : Jupyter Notebook
Process Flow
Data
Collection

Visualization
Data
[graps, Analysis
charts]

K– Means Identify
Algo. Clusters
STEPS

1. Load customer dataset


2. Pre-processing the dataset
3. Implementing K-means clustering in Python
4. Finding the optimal number of clusters (k)
5. Visualizing customer segments
DATASET
CODE
K-MEANS CLUSTERING
RESULT
Cluster 0 shows the customers with average salary and average spending so we
can categorize these customers as neutral.

Cluster 1 shows the customers with high income and high spending so they can
be categorized as target, and these customers can be the most profitable
customers for the mall owner.

Cluster 2 shows the low income and also low spending so they can be
categorized as sensible.

Cluster 3 shows the customer has a high income but low spending, so we can
categorize them as careful.

Cluster 4 shows the customers with low income with very high spending so
they can be categorized as careless.
Decision Tree Classifier Accuracy
Silhouette Score Accuracy
CONCLUSION

1. The Silhouette Score of 0.41 indicates that the


clustering algorithm (used for customer segmentation)
is reasonably effective in creating distinct clusters.

2. The Decision Tree Accuracy of 57.50% suggests that


the decision tree model is correct in its predictions for a
little more than half of the instances.

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