Customer Segmentation for E-Commerce Using Recency Frequency Monetary and Hierarchical Clustering

Most E-commerce websites use a recommendation system to provide a better user experience for customers. The reason for this is CRM (Customer Relations Management). CRM defines the value of a customer and the status of the company's relationship with them. Customer segmentation is dividing customers into different groups based on their past activity on the website. This segregation puts them in a particular group with other customers resembling their behavior. This aids the recommendation system in producing a more customized experience for customers, with added intelligence to the system. RFM or Recency Frequency Monetary is a very popular technique of Customer Segmentation. It uses three parameters to rank customers. In this paper, the authors have discussed their proposed techniques, discussed their impact and relevance.