How to group customers by spending
Not every customer is equal. Grouping them by how much and how often they buy helps you decide who to thank, who to follow up with and who needs little effort.
The idea
For each customer add up total money and number of orders. Then ask a method called k-means to place customers in two to four groups so that customers in a group are similar to each other.
How to use the groups
Look at the biggest group’s members first. Thank them, keep stock for them, and ask what they want. For the smallest group, decide whether a simple offer is worth the effort.
Check the result
Groups are a guide. If one customer is huge because of a single order, treat it with care.
In Super B.A.: The ML Lab groups customers (or products or places) and explains the table. Open the app
Related guides
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- SQL for beginners: SELECT, SUM and GROUP BY
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General information for learning. It is not financial, tax, legal or investment advice.