Mining Your Own Business in Retail Using DB2 Intelligent Miner for Data

Chapter 4. How can I characterize my customers from the mix of products that they purchase? 49

If you do not have existing business rules, or a set of customer characteristics

that you prefer to use, then we have attempted to describe a set of customer

attributes; we call them characteristic variables, that all retail organizations

should be capable of deriving from information captured at the point of sale. We

are going to use these characteristic variables throughout this book and hopefully

show you how data mining can be used to generate the business value from

them. If you do not already derive these, or a similar set of characteristic

variables about your customers, then you should consider doing so.

4.2 The data to be used

You clearly cannot do data mining without having the data about your customers

to mine. But what data do you need?

The second stage in our data mining

method

is to identify the data required to address the business issue and where

we are going to get it from.

In this section we look at what types of data are typically available to retail

organizations and how these can be used to determine customer characteristics.

We then suggest how to construct a relatively simple data model that can be

used as a starting point for discovering similar groups of customers. The data

model we describe should be derivable by all retail organizations from data

routinely collected at the point of sale. The model can then easily be extended to

include other types of data collected about your customers.

4.2.1 The types of data that can be used for data mining

Depending on the size of the your organization, you already have a wide variety

of data about your customers. This may range from transaction data, collected at

the point of sale, to the storage of all types of derived information about your

customers, stored in some form of data warehouse.

To perform data mining for customer characterization, there are essentially five

types of data that can used to develop a customer segmentation model:

򐂰 Product data

򐂰 Transactional data

򐂰 Demographic data

򐂰 Customer relationship data

򐂰 Additional data

Although all are desirable, only the first two are essential. The five types of data

are detailed below.