• Title/Summary/Keyword: customer behavior prediction

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A new Customer Segmentation Method for the Prediction of Customer Buying Behavior (고객 구매 행동 예측을 위한 새로운 고객 세분화 방안)

  • 이장희
    • Proceedings of the Korean Society for Quality Management Conference
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    • 2004.04a
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    • pp.573-575
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    • 2004
  • This study presents a new customer segmentation method based on features that can predict the customer's buying behavior. In this method, we consider all variables that can affect the customer's buying behavior including demographics, psychographics, technographics, transaction pattern-related variables, etc. We define several features which are the combination of variables with the interaction effect by using C5.0, use SOM (Self-Organizing Map) neural networks in odor to extract the feature's patterns and classify, and then make features' rules using C5.0 far the prediction of customer buying behavior

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The Redemption Behavior of Loyalty Points and Customer Lifetime Value (로열티 포인트 사용행동과 고객생애가치(Customer Lifetime Value) 분석)

  • Park, Dae-Yun;Yoo, Shijin
    • Journal of the Korean Operations Research and Management Science Society
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    • v.39 no.3
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    • pp.63-82
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    • 2014
  • The main objective of this research is to investigate whether the RFM (recency-frequency-monetary value) information of a customer's redemption behavior of loyalty points can improve the prediction of future value of the customer. The conventional measurement of customer value has been primarily based on purchase transactions behavior although a customer's future behavior can be also influenced by other interactions between the customer and the firm such as redemption of rewards in a loyalty program. We theorize why a customer's redemption behavior can influence her future purchases and thereby the customer's total value based on operant learning theory, goal gradient hypothesis, and lock-in effect. Using a dataset from a major book store in Korea spanning three years between 2008 and 2010, we analyze both purchase transactions and redemption records of over 10,000 customers. The results show that the redemption-based RFM information does improve the prediction accuracy of the customer's future purchases. Based on this result, we also propose an improved estimate of customer lifetime value (CLV) by combining purchase transactions and loyalty points redemption data. Managerial implications will be also discussed for firms managing loyalty programs to maximize the total value customers.

Consumer behavior prediction using Airbnb web log data (에어비앤비(Airbnb) 웹 로그 데이터를 이용한 고객 행동 예측)

  • An, Hyoin;Choi, Yuri;Oh, Raeeun;Song, Jongwoo
    • The Korean Journal of Applied Statistics
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    • v.32 no.3
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    • pp.391-404
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    • 2019
  • Customers' fixed characteristics have often been used to predict customer behavior. It has recently become possible to track customer web logs as customer activities move from offline to online. It has become possible to collect large amounts of web log data; however, the researchers only focused on organizing the log data or describing the technical characteristics. In this study, we predict the decision-making time until each customer makes the first reservation, using Airbnb customer data provided by the Kaggle website. This data set includes basic customer information such as gender, age, and web logs. We use various methodologies to find the optimal model and compare prediction errors for cases with web log data and without it. We consider six models such as Lasso, SVM, Random Forest, and XGBoost to explore the effectiveness of the web log data. As a result, we choose Random Forest as our optimal model with a misclassification rate of about 20%. In addition, we confirm that using web log data in our study doubles the prediction accuracy in predicting customer behavior compared to not using it.

Estimating Customer Value under B2B Environment Using Description and Prediction Models (B2B 거래에서 서술모델과 예측모델을 이용한 고객가치 산정)

  • 박찬주;박윤선;주상호;유우연
    • Korean Management Science Review
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    • v.20 no.2
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    • pp.135-149
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    • 2003
  • Developing a proper program for customer evaluation is one of the most imminent tasks to implement CRM (Customer Relationship Management). Design of the Customer Value model is an important key to the customer evaluation progrgm. This paper proposes two models for estimating Customer Value. The first one is a Description Model for Customer Value based on customer CSI (Customer Satisfaction Index) data. This model represents as quantitative numbers what customers feel from the company or the service. The second one is a Prediction Model which employs factor analysis and regression to predict customer value. This paper exploits the two models to evaluate Customer Value as well as for customer behavior prediction.

A Personaliz Customer Retention Procedure For Internet Game Site Based on the Self-Organizing Map and Association Rule Mining.

  • Song Hee Seok;Kim Jae Kyeong;Kim Soung Hie;Chae Kyung Hee
    • Proceedings of the Korean Operations and Management Science Society Conference
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    • 2002.05a
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    • pp.306-311
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    • 2002
  • This paper propose a personalized defection detection and prevention procedure based on the observation that potential defectors have tendency to take a couple of months or weeks. For this purpose, possible states of customer behavior are determined from past behavior data using SOM (Self-Organizing Map). For the evaluation of the proposed procedure, a case study has been conducted for a Korean online game site. The result demonstestes that the proposed procedure can assist defection prevention effectively and detect potential defectors without deterioration of prediction accuracy comparison to prediction by MLP. Our procedure can be applied to various service industries that can capture fluent customer behavior data such as telecommunications, internet access services, and content services, too.

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Defection Detection Analysis Based on Time-Dependent Data

  • Song, Hee-Seok;Kim, Jae-Kyeong;Chae, Kyung-Hee
    • Proceedings of the Korea Inteligent Information System Society Conference
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    • 2002.11a
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    • pp.445-453
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    • 2002
  • Past and current customer behavior is the best predicator of future customer behavior. This paper introduces a procedure on personalized defection detection and prevention for an online game site. The basic idea for our defection detection and prevention is adopted from the observation that potential defectors have a tendency to take a couple of months or weeks to gradually change their behavior (i.e. trim-out their usage volume) before their eventual withdrawal. For this purpose, we suggest a SOM (Self-Organizing Map) based procedure to determine the possible states of customer behavior from past behavior data. Based on this representation of the state of behavior, potential defectors are detected by comparing their monitored trajectories of behavior states with frequent and confident trajectories of past defectors. The key feature of this study includes a defection prevention procedure which recommends the desirable behavior state for the ext period so as to lower the likelihood of defection. The defection prevention procedure can be used to design a marketing campaign on an individual basis because it provides desirable behavior patterns for the next period. The experiments demonstrate that our approach is effective for defection prevention and efficient for defection detection because it predicts potential defectors without deterioration of prediction accuracy compared to that of the MLP (Multi-Layer Perceptron) neural network.

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Analyzing Customer Purchase Behavior of a Department Store and Applying Customer Relationship Management Strategies (백화점 고객의 구매 분석 및 고객관계관리 전략 적용)

  • Ha Sung Ho;Baek Kyung Hoon
    • Korean Management Science Review
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    • v.21 no.3
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    • pp.55-69
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    • 2004
  • This study analyzes customer buying-behavior patterns in a department store as time goes on, and predicts moving patterns of its customers. Through them, it suggests in this paper short-term and long-term marketing promotion strategies. RFM techniques are utilized for customer segmentation. Customers are clustered by using the Kohonen's Self Organizing Map as a method of data mining techniques. Then C5.0, a decision tree analysis technique, is used to predict moving patterns of customers. Using real world data, this study evaluates the prediction accuracy of predictive models.

A dynamic procedure for defection detection and prevention based on SOM and a Markov chain

  • Kim, Young-ae;Song, Hee-seok;Kim, Soung-hie
    • Proceedings of the KAIS Fall Conference
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    • 2003.11a
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    • pp.141-148
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    • 2003
  • Customer retention is a common concern for many industries and a critical issue for the survival in today's greatly compressed marketplace. Current customer retention models only focus on detection of potential defectors based on the likelihood of defection by using demographic and customer profile information. In this paper, we propose a dynamic procedure for defection detection and prevention using past and current customer behavior by utilizing SOM and Markov chain. The basic idea originates from the observation that a customer has a tendency to change his behavior (i.e. trim-out his usage volumes) before his eventual withdrawal. This gradual pulling out process offers the company the opportunity to detect the defection signals. With this approach, we have two significant benefits compared with existing defection detection studies. First, our procedure can predict when the potential defectors could withdraw and this feature helps to give marketing managers ample lead-time for preparing defection prevention plans. The second benefit is that our approach can provide a procedure for not only defection detection but also defection prevention, which could suggest the desirable behavior state for the next period so as to lower the likelihood of defection. We applied our dynamic procedure for defection detection and prevention to the online gaming industry. Our suggested procedure could predict potential defectors without deterioration of prediction accuracy compared to that of the MLP neural network and DT.

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A Methodology of Customer Churn Prediction based on Two-Dimensional Loyalty Segmentation (이차원 고객충성도 세그먼트 기반의 고객이탈예측 방법론)

  • Kim, Hyung Su;Hong, Seung Woo
    • Journal of Intelligence and Information Systems
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    • v.26 no.4
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    • pp.111-126
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    • 2020
  • Most industries have recently become aware of the importance of customer lifetime value as they are exposed to a competitive environment. As a result, preventing customers from churn is becoming a more important business issue than securing new customers. This is because maintaining churn customers is far more economical than securing new customers, and in fact, the acquisition cost of new customers is known to be five to six times higher than the maintenance cost of churn customers. Also, Companies that effectively prevent customer churn and improve customer retention rates are known to have a positive effect on not only increasing the company's profitability but also improving its brand image by improving customer satisfaction. Predicting customer churn, which had been conducted as a sub-research area for CRM, has recently become more important as a big data-based performance marketing theme due to the development of business machine learning technology. Until now, research on customer churn prediction has been carried out actively in such sectors as the mobile telecommunication industry, the financial industry, the distribution industry, and the game industry, which are highly competitive and urgent to manage churn. In addition, These churn prediction studies were focused on improving the performance of the churn prediction model itself, such as simply comparing the performance of various models, exploring features that are effective in forecasting departures, or developing new ensemble techniques, and were limited in terms of practical utilization because most studies considered the entire customer group as a group and developed a predictive model. As such, the main purpose of the existing related research was to improve the performance of the predictive model itself, and there was a relatively lack of research to improve the overall customer churn prediction process. In fact, customers in the business have different behavior characteristics due to heterogeneous transaction patterns, and the resulting churn rate is different, so it is unreasonable to assume the entire customer as a single customer group. Therefore, it is desirable to segment customers according to customer classification criteria, such as loyalty, and to operate an appropriate churn prediction model individually, in order to carry out effective customer churn predictions in heterogeneous industries. Of course, in some studies, there are studies in which customers are subdivided using clustering techniques and applied a churn prediction model for individual customer groups. Although this process of predicting churn can produce better predictions than a single predict model for the entire customer population, there is still room for improvement in that clustering is a mechanical, exploratory grouping technique that calculates distances based on inputs and does not reflect the strategic intent of an entity such as loyalties. This study proposes a segment-based customer departure prediction process (CCP/2DL: Customer Churn Prediction based on Two-Dimensional Loyalty segmentation) based on two-dimensional customer loyalty, assuming that successful customer churn management can be better done through improvements in the overall process than through the performance of the model itself. CCP/2DL is a series of churn prediction processes that segment two-way, quantitative and qualitative loyalty-based customer, conduct secondary grouping of customer segments according to churn patterns, and then independently apply heterogeneous churn prediction models for each churn pattern group. Performance comparisons were performed with the most commonly applied the General churn prediction process and the Clustering-based churn prediction process to assess the relative excellence of the proposed churn prediction process. The General churn prediction process used in this study refers to the process of predicting a single group of customers simply intended to be predicted as a machine learning model, using the most commonly used churn predicting method. And the Clustering-based churn prediction process is a method of first using clustering techniques to segment customers and implement a churn prediction model for each individual group. In cooperation with a global NGO, the proposed CCP/2DL performance showed better performance than other methodologies for predicting churn. This churn prediction process is not only effective in predicting churn, but can also be a strategic basis for obtaining a variety of customer observations and carrying out other related performance marketing activities.

Predicting Session Conversion on E-commerce: A Deep Learning-based Multimodal Fusion Approach

  • Minsu Kim;Woosik Shin;SeongBeom Kim;Hee-Woong Kim
    • Asia pacific journal of information systems
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    • v.33 no.3
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    • pp.737-767
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    • 2023
  • With the availability of big customer data and advances in machine learning techniques, the prediction of customer behavior at the session-level has attracted considerable attention from marketing practitioners and scholars. This study aims to predict customer purchase conversion at the session-level by employing customer profile, transaction, and clickstream data. For this purpose, we develop a multimodal deep learning fusion model with dynamic and static features (i.e., DS-fusion). Specifically, we base page views within focal visist and recency, frequency, monetary value, and clumpiness (RFMC) for dynamic and static features, respectively, to comprehensively capture customer characteristics for buying behaviors. Our model with deep learning architectures combines these features for conversion prediction. We validate the proposed model using real-world e-commerce data. The experimental results reveal that our model outperforms unimodal classifiers with each feature and the classical machine learning models with dynamic and static features, including random forest and logistic regression. In this regard, this study sheds light on the promise of the machine learning approach with the complementary method for different modalities in predicting customer behaviors.