Customer-Behavior-Analysis

Project from Educative

What is customer behavior?

The decisions and instincts that make a customer buy a certain product or service can be described as customer behavior.

With the advent of targeted marketing, traditional marketing techniques are getting obsolete with every new day. The rise of digital marketing, where every customer is shown advertisements particular to their interests and habits, has taken over the world.

This insight into customer's interests and habits is obtained through an extensive customer behavior analysis approach. We will try to implement a very basic level of this approach that will include finding the products that are selling more and at which time of the day. Then we will group the customers according to their buying habits.

Why is it important?

Do you know that the average attention span of a person is at an all-time low? This means that an average advertiser or salesperson has only seven seconds to grasp a customer's attention before they move to another product as there are so many options available for them to choose from.

A customer will only be interested in your product if they somehow get convinced that it aligns with their interests and habits.

Results?

1. We will try to provide promising results for the following queries:

2. Do users prefer the products of a specific brand?

3. What is the user's activity(view, cart, buy) throughout the day?

4. Items from which brands and categories are most preferred by users?

5. Can we effectively conduct targeted marketing?

RFM analysis

RFM is a categorizing technique that uses the previous purchasing behavior of the customers to divide customers into groups so that an optimal marketing strategy can be developed for each individual. RFM stands for recency, frequency, and monetary, respectively.

• Recency: How many days have passed since a customer has bought an item

• Frequency: How many orders a customer has placed

• Monetary: How much money a customer has spent

Need for RFM analysis

• This technique efficiently categorizes the customers into specific rank-based groups taking into account their past online behaviors.

• This can help marketers and advertisers target each group of consumers separately, enabling them to cater to the needs of groups instead of each individual.

• This technique also informs us of the most and least profit yielding customers so relevant resources can be deployed to each group according to their needs.

• If the results of this technique are correctly used, then even customers who don’t engage in much activity(view, cart, buy) can be influenced to be high potential customers.