Buyer targeting optimization: A unified customer segmentation perspective

In marketing analytics, customer segmentation (clustering) divides a customer base into groups of similar individuals, while buyer targeting (classification) identifies promising customers. Both customer segmentation and buyer targeting help the business to improve marketing performances by allocating resources to the most profitable customers. Due to the heterogeneity across the customer groups, some studies have been made on combining the tasks of customer segmentation and buyer targeting for tailored marketing strategies. However, these efforts usually combine these two tasks in a simple step-by-step approach. It is still unclear how to implement these two tasks in a more integrated and optimized way, which is the research objective of this paper. Specifically, we formulate customer segmentation and buyer targeting as a unified optimization problem. Then, the customer segments are adaptively realized during the targeting optimization process. In this way, the integrated approach not only improves the buyer targeting performances but also provides a new perspective of segmentation based on the buying decision preferences of the customers. The unified customer segmentation and buyer targeting method not only quantifies the purchase tendency of a specific customer but also characterizes the buying decision behaviors at the segment level. We also develop an efficient K-Classifiers Segmentation algorithm to solve the unified optimization problem. Moreover, we show that the customer segmentation based on the buying decision preferences can also be consistent with the features on customer profiles. Finally, we have performed the extensive experiments on several real-world Business to Business (B2B) marketing data sets. The results show that our approach offers not only more accurate targeting of promising customers but also meaningful customer segmentation solutions with interpretable buying decision preferences for each customer segment.