JOURNAL OF INFORMATICS AND TELECOMMUNICATION ENGINEERING
Vol 5, No 1 (2021): EDISI JULY 2021

E-Commerce Customer Segmentation Using K-Means Algorithm and Length, Recency, Frequency, Monetary Model

Romadansyah Siagian (STMIK Mikroskil)
Pahala Sirait Pahala Sirait (STMIK Mikroskil)
Arwin Halima (STMIK Mikroskil)



Article Info

Publish Date
16 Jul 2021

Abstract

The growth of the e-commerce business sector presents competitors and creates company competition. Customers are the company's main asset that must be maintained. Understanding the different characteristics, behaviors and habits of each customer segment is important for companies to identify potential customers, establish important strategies, manage customer relationships and increase company profitability. The needs and desires of each customer are different, so that determining a strategy requires a method of segmenting customers according to their respective similarities. Using the clustering method with the K-Means algorithm helps determine customer segmentation based on transaction history data. Determination of the optimal k cluster randomized K-Means doesn't always give good result, so the Elbow, Silhouette and Davies-Bouldin Index methods are used. The determination of the test variables is based on the LRFM model (Length, Recency, Frequency, and Monetary), so that the customer segmentation obtained is more accurate in recognizing customer behavior and loyalty. The results of test 3606 dataset through the preprocessing stage using these methods results in three groups of customers that is New Customers, Lost Customers and Core Customers adjust the Customer Loyalty Matrix LRFM

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Journal Info

Abbrev

jite

Publisher

Subject

Computer Science & IT Engineering

Description

JURNAL TEKNIK INFORMATIKA, JITE (Journal of Informatics and Telecommunication Engineering) is a journal that contains articles / publications and research results of scientific work related to the field of science of Informatics Engineering such as Software Engineering, Database, Data Mining, ...