Segmenting consumers with clustering

In this tutorial, you will re-enter the shoes of the business analyst working for the online retailer we encountered in Chapter 3, Transforming Data. This time, instead of automating the creation of a set of financial reports, you are after a seemingly sexier objective. The Customer Relationship Management (CRM) team is looking for a smarter way to communicate with those customers who opted-in to receive regular newsletters. Instead of sending a weekly email equal for all, the CRM manager asked you to find a data-based approach for creating a few meaningful consumer segments. Once segments are defined, the CRM team can build multiple messages, one for each segment. By doing so, they will offer a more personalized (and engaging) experience for the entire customer base, which will ultimately affect customer loyalty and drive sustainable revenue growth.

Unsupervised learning offers a proven methodology that can meet this business need: by using...