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Customer Segmentation - Clustering sample

ML.NET version API type Status App Type Data type Scenario ML Task Algorithms
v1.4 Dynamic API Up-to-date Console app .csv files Customer segmentation Clustering K-means++

Problem

You want to identify groups of customers with similar profile so you could target them afterwards (like different marketing campaigns per identified customer group with similar characteristics, etc.)

The problem to solve is how you can identify different groups of customers with similar profile and interest without having any pre-existing category list. You are not classifying customers across a category list because your customers are not labeled so you cannot do that. You just need to make groups/clusters of customers that the company will use afterwards for other business purposes.

DataSet

In this hypothetical case, the data to process is coming from 'The Wine Company'. That data is basically a historic of offers/deals (part of marketing campaigns) provided by the company in the past plus the historic of purchases made by customers.

The training dataset is located in the assets/inputs folder, and split between two files. The offers file contains information about past marketing campaigns with specific offers/deals:

Offer # Campaign Varietal Minimum Qty (kg) Discount (%) Origin Past Peak
1 January Malbec 72 56 France FALSE
2 January Pinot Noir 72 17 France FALSE
3 February Espumante 144 32 Oregon TRUE
4 February Champagne 72 48 France TRUE
5 February Cabernet Sauvignon 144 44 New Zealand TRUE

The transactions file contains information about customer purchases (related to the mentioned offers):

Customer Last Name Offer #
Smith 2
Smith 24
Johnson 17
Johnson 24
Johnson 26
Williams 18

This dataset comes from John Foreman's book titled Data Smart.

ML Task - Clustering

The ML task to solve this kind of problem is called Clustering.

By applying ML clustering techniques, you will be able to identify similar customers and group them in clusters without having pre-existing categories and historic labeled/categorized data. Clustering is a good way to identify groups of 'related or similar things' without having any pre-existing category list. That is precisely the main difference between clustering and classification.

The algorithm used for this task in this particular sample is K-Means. In short, this algorithm assign samples from the dataset to k clusters:

  • K-Means does not figure out the optimal number of clusters, so this is an algorithm parameter
  • K-Means minimizes the distance between each point and the centroid (midpoint) of the cluster
  • All points belonging to the cluster have similar properties (but these properties does not necessarily directly map to the features used for training, and are often objective of further data analysis)

Plotting a chart with the clusters helps you to visually identify what number of clusters works better for your data depending on how well segregated you can identify each cluster. Once you decide on the number of clusters, you can name each cluster with your preferred names and use each customer group/cluster for any business purpose.

The following picture shows a sample clustered data distribution, and then, how k-Means is able to re-build data clusters.

From the former figure, one question arises: how can we plot a sample formed by different features in a 2 dimensional space? This is a problem called "dimensionality reduction": each sample belongs to a dimensional space formed by each of his features (offer, campaign, etc), so we need a function that "translates" observation from the former space to another space (usually, with much less features, in our case, only two: X and Y). In this case, we will use a common technique called PCA, but there exists similar techniques, like SVD which can be used for the same purpose.

To solve this problem, first we will build an ML model. Then we will train the model on existing data, evaluate how good it is, and finally we'll consume the model to classify customers into clusters.

1. Build Model

Data Pre-Process

The first thing to do is to join the data into a single view. Because we need to compare transactions made by the users, we will build a pivot table, where the rows are the customers and the columns are the campaigns, and the cell value shows if the customer made related transaction during that campaign.

The pivot table is built executing the PreProcess function which is this case is implemented by loading the files data in memory and using Linq to join the data. But you could use any other approach depending on the size of your data, such as a relational database or any other approach:

// inner join datasets
var clusterData = (from of in offers
                   join tr in transactions on of.OfferId equals tr.OfferId
                   select new
                   {
                       of.OfferId,
                       of.Campaign,
                       of.Discount,
                       tr.LastName,
                       of.LastPeak,
                       of.Minimum,
                       of.Origin,
                       of.Varietal,
                       Count = 1,
                   }).ToArray();

// pivot table (naive way)
var pivotDataArray =
    (from c in clusterData
     group c by c.LastName into gcs
     let lookup = gcs.ToLookup(y => y.OfferId, y => y.Count)
     select new PivotData()
     {
         C1 = (float)lookup["1"].Sum(),
         C2 = (float)lookup["2"].Sum(),
         C3 = (float)lookup["3"].Sum(),
         // ...
      };

The data is saved into the file pivot.csv, and it looks like the following table:

C1 C2 C3 C4 C5 C6 C8 C9 C10 C11 C12 C13 C14 C15 C16 C17 C18 C19 C20 C21 C22 C23 C24 C25 C26 C27 C28 C29 C30 C31 C32 LastName
1 0 0 1 0 0 0 0 1 0 1 0 0 1 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0
1 1 0 0 0 0 0 0 0 0 1 0 0 0 1 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0
1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Model pipeline

Here's the code which will be used to build the model:

//Create the MLContext to share across components for deterministic results
MLContext mlContext = new MLContext(seed: 1);  //Seed set to any number so you have a deterministic environment

// STEP 1: Common data loading configuration
var pivotDataView = mlContext.Data.LoadFromTextFile(path: pivotCsv,
                                            columns: new[]
                                                        {
                                                        new TextLoader.Column("Features", DataKind.Single, new[] {new TextLoader.Range(0, 31) }),
                                                        new TextLoader.Column(nameof(PivotData.LastName), DataKind.String, 32)
                                                        },
                                            hasHeader: true,
                                            separatorChar: ',');

// STEP 2: Configure data transformations in pipeline
var dataProcessPipeline = mlContext.Transforms.ProjectToPrincipalComponents(outputColumnName: "PCAFeatures", inputColumnName: "Features", rank: 2)
        .Append(mlContext.Transforms.Categorical.OneHotEncoding(outputColumnName: "LastNameKey", inputColumnName: nameof(PivotData.LastName), OneHotEncodingEstimator.OutputKind.Indicator));
                

// STEP 3: Create the training pipeline                
var trainer = mlContext.Clustering.Trainers.KMeans(featureColumnName: "Features", numberOfClusters: 3);
var trainingPipeline = dataProcessPipeline.Append(trainer);

In this case, TextLoader doesn't define explicitly each column, but declares a Features property made by the first 32 columns of the file; also declares the property LastName to the value of the last column.

Then, you need to apply some transformations to the data:

  1. Add a PCA column, using the mlContext.Transforms.Projection.ProjectToPrincipalComponents(outputColumnName: "PCAFeatures", inputColumnName: DefaultColumnNames.Features, rank: 2) Estimator, passing as parameter rank: 2, which means that we are reducing the features from 32 to 2 dimensions (x and y)

  2. Transform LastName using OneHotEncodingEstimator

  3. Add a KMeansPlusPlusTrainer; main parameter to use with this learner is clustersCount, that specifies the number of clusters

2. Train model

After building the pipeline, we train the customer segmentation model by fitting or using the training data with the selected algorithm:

ITransformer trainedModel = trainingPipeline.Fit(pivotDataView);

3. Evaluate model

We evaluate the accuracy of the model. This accuracy is measured using the ClusteringEvaluator, and the Accuracy and AUC metrics are displayed.

var predictions = trainedModel.Transform(pivotDataView);
var metrics = mlContext.Clustering.Evaluate(predictions, scoreColumnName: "Score", featureColumnName: "Features");

Finally, we save the model to local disk using the dynamic API:

 //STEP 6: Save/persist the trained model to a .ZIP file
using (var fs = new FileStream(modelZip, FileMode.Create, FileAccess.Write, FileShare.Write))
    mlContext.Model.Save(trainedModel, pivotDataView.Schema, fs);

Model training execution

Once you open the solution in Visual Studio, the first step is to create the customer segmentation model. Start by settings the project CustomerSegmentation.Train as Startup project in Visual Studio, and then hit F5. A console application will appear and it will create the model (and saved in the assets/output folder). The output of the console will look similar to the following screenshot:

4. Consume the model

The model created during last step is used in the project CustomerSegmentation.Predict. Basically, we load the model, then the data file and finally we call Transform to execute the model on the data.

In this case, the model is not predicting any value (like a regression task) or cassifying anything (like a classification task) but building possible clusters/groups of customers based on their information.

The code below is how you use the model to create those clusters:

var data = _mlContext.Data.LoadFromTextFile(path:_pivotDataLocation,
                            columns: new[]
                                        {
                                          new TextLoader.Column("Features", DataKind.Single, new[] {new TextLoader.Range(0, 31) }),
                                          new TextLoader.Column(nameof(PivotData.LastName), DataKind.String, 32)
                                        },
                            hasHeader: true,
                            separatorChar: ',');

//Apply data transformation to create predictions/clustering
var tranfomedDataView = _trainedModel.Transform(data);
var predictions = _mlContext.Data.CreateEnumerable <ClusteringPrediction>(tranfomedDataView, false)
                            .ToArray();

Additionally, the method SaveCustomerSegmentationPlotChart() saves an scatter plot drawing the samples in each assigned cluster, using the OxyPlot library.

Run the model and identify the clusters

To run the previous code, set the project CustomerSegmentation.Predict as Startup project in Visual Studio and hit F5.

After executing the predict console app, a plot will be generated in the assets/output folder, showing the cluster distribution (similar to the following figure):

customer segmentation

In that chart you can identify 3 clusters. In this case, two of them are better differenciated (Cluster 1 in Blue and cluster 2 in Green). However, the cluster number 3 is only partially differenciated and part of the customers are overlapping the cluster number 2, which can also happen with groups of customers.