Customer segmentation is a deceptively simple-sounding concept. Broadly speaking, the goal is to divide customers into groups that share certain characteristics. There are an almost-infinite number of characteristics upon which you could divide customers, however, and the optimal characteristics and analytic approach vary depending upon the business objective. This means that there is no single, correct way to perform customer segmentation.
In this post, I work through a practical example that, in my experience, closely mirrors the challenges of performing this kind of analysis with real data.Read More