Customer Loyalty Clustering Model Using K-Means Algorithm with LRIFMQ Parameters

Aloysius Matz Teguh Utomo

Abstract


Loyal customers are one of the factors that determine the development of a business. Therefore, businesses need a strategy to keep customers loyal, even making customers who were previously less loyal to become more loyal. The strategy used must be right on target according to customer segmentation. The purpose of this paper is to model a cluster of customer loyalty to help businesses in making the right decisions of marketing strategy. Segmentation is done using the k-means algorithm with LRIFMQ (length, recency, interval, frequency, monetary, quantity) as parameters, and the CLV (customer lifetime value) of each cluster is calculated. Data obtained from PT. XYZ (a company engaged in food processing) for one year (1 January 2019 - 31 December 2019), with 337.739 transactions, and 26.683 customers. AHP (analytical hierarchy process) method is used for LRIFMQ weighting because this method has a consistency index calculation. The silhouette coefficient is used to calculate the cluster quality and determine the optimal number of clusters. The best results are obtained with the silhouette coefficient value of 0,632904 with the number of clusters 6.

Keywords


customer analysis; k-means; LRIFMQ; analytical hierarchy process; AHP; silhouette coefficient.

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References


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DOI: http://dx.doi.org/10.25139/inform.v0i1.2691

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