Customer Segmentation and Customer Life Time Value

Abstract: Customer segmentation permits for an efficient allocation of promoting resources and maximizes opportunities to cross-sell and up-sell clients so as to extend average order price & customer period price. In today's era of availability of wide variety of products and services, customer segmentation and identifying the potential customer aids in effective business growth. This paper shows the grouping of the customers, using the k-means algorithm, based on the RFM (Recency Frequency Monetary) analysis followed by the customer life time value prediction to identify the potential customers.

Keywords: RFM, Customer Life Time Value, Machine Learning, Customer Segmentation, Clustering