elihe90 / customer_segmentation-using-rfm-clustering

Customer_Segmentation-using-RFM-Clustering

Customer segmentation is the process of separating customers into groups on the basis of their shared behavior or other attributes. The groups should be homogeneous within themselves and should also be heterogeneous to each other. The overall aim of this process is to identify high-value customer base i.e. customers that have the highest growth potential or are the most profitable.

RFM Segmentation RFM stands for Recency, Frequency, and Monetary. RFM analysis is a commonly used technique to generate and assign a score to each customer based on how recent their last transaction was (Recency), how many transactions they have made in the last year (Frequency), and what the monetary value of their transaction was (Monetary).