Understanding Clustering and Profiling in CRM

 

Here is what you need to know about clustering and profiling in CRM….

 

 

 

Clustering can be defined as the process of understanding patterns that are common to a group of customers or prospects. While I was defining customer relationship management, I have said that Analytical CRM allows you to analyze customers’ data and understand patterns that they have in common.
 
 
Clustering as a process make use of Analytical CRM in order to predict patterns that customers or prospects have in common. It might be that they indicate interest in common products or services or they have some characteristics that made them fall into the same category.


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Clustering make use of three attributes in order to categorize customers and decide whether they are profitable or not. It is always based on the principle of Recency, Frequency and Monetary behavior of customers. This is sometimes referred to as the Wallet Shares of customers. That is the fraction of their earning that they are willing to spend on your products or services.


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Clustering algorithm assign customers to different categories based on attributes that they have in common.  This will help customer centric enterprise to come up with programs aimed at raising exit barrier for customers.


 Action Point
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