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E-commerce Customer Segmentation & RFM Analysis

πŸ“Š Project Overview

Processed over 500,000 transaction records from a UK-based retailer to optimize marketing ROI. Utilized K-Means Clustering to segment customers and performed Cohort Analysis to identify a critical drop-off in user retention during the 3rd month.

πŸ› οΈ Tech Stack

  • Python: Pandas, NumPy, Scikit-Learn.
  • Analysis: RFM (Recency, Frequency, Monetary) Modeling.
  • Visualization: Seaborn Heatmaps, Matplotlib.

πŸ” Key Findings

  1. Segmentation: Identified 3 distinct customer profiles ("Champions", "Mid-Value", "At-Risk") using unsupervised learning (K-Means).
  2. Retention Strategy: Cohort analysis revealed a significant retention drop-off (~40% decline) after Month 3, signaling the need for a targeted re-engagement email campaign at the 90-day mark.
  3. Automation: Built a reusable pipeline to auto-calculate RFM scores for 4,000+ unique customers.

πŸ“ˆ Visuals

Cohort Heatmap (Retention rates declining over time, highlighting the Month 3 drop-off point.)

About

Processed over 500,000 transaction records from a UK-based retailer to optimize marketing ROI. Utilized K-Means Clustering to segment customers and performed Cohort Analysis to identify a critical drop-off in user retention during the 3rd month.

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