# Datamining group final version Essay

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Data Mining Turn in your answers, along with excerpted output as relevant. In this assignment, we will explore RFM segmentation, a technique used to group customers according to their aggregate purchase history with a company. We specifically look at how recently customers have purchased (R – recency), how often they have purchased (F – frequency), and how much they have spent (M – monetary). We will then consider how these different segments responded to the offer to buy “The Art History of Florence.” Use the CUSTOMER.SAV dataset for all parts of this assignment. Team members: WANG MAOXIN 53869782 LIU YI 53699531 YANG RONGRONG 53719976 HONG YIHAN 53735560 HUXIAO 53872424 MA CHUI YU 53916610 CHING KAM TO…show more content…
For this dataset, use the following breakpoints: Recency Frequency Monetary 1-3 months 3 or more orders \$201 and up 4-6 months 2 orders \$101-\$200 7-12 months 1 order \$51-\$100 > 12 months \$26-\$50 \$1-\$25 Create a composite RFM index for each customer (use “Transform/Compute” in SPSS). HINT: Suppose a customer has the following individual index values: R = 2 F = 1 M = 4 The resulting RFM index would be 214. You can create such an index with the following formula: RFM index = R*100 + F*10 + M (Type any name you want into “Target Variable”). Do the Decile Analysis- Use the transform/Rank Case to break the sample into 10 deciles. Make sure you specify lower the rank the better it is. Generate a report showing number of customers per RFM segment, and the response rate to the offer to buy “The Art History of Florence” per RFM segment (remember that the response rate is the mean of the BUYERS variable). HINT: use Analyze/Reports/Case Summaries) Case Summaries Bought "Art History of Florence?" Percentile Group of RFMSCORE1 N Mean % of Total Sum 1 4847 .20 21.1% 2 5241 .12 14.5% 3 4824 .15 16.4% 4 5371 .08 9.2% 5 4762 .09 9.9% 6 4815 .09 9.5% 7 5151 .07 7.9% 8 4806 .04 4.6% 9 5039 .04 4.7% 10 5144 .02 2.2% Total 50000 .09 100.0% Transfer the output to Excel. 5. Suppose that the mailing offering “The Art History of Florence” to these 50,000 customers cost 50