Customer Profitability – Segmentation and Prediction

Domain: Retail

Summary

Clustering consumers into segments based on their profitability.

Sonae MC is the market leader in food retail in Portugal, with a track record of over 30 years of consistent growth on the back of expanding the store footprint, managing a highly diversified portfolio of banners, formats and channels and maintaining a culture of continuous improvement and efficiency.

Description

The food retail current setting is highly competitive in which the players compete in every stance for customer preference. This extreme competition pushes retailers to expand their focus on customer insight and knowledge creation processes. Data on consumer behaviour is critical as a basis for retailers to adapt their assortments, prices and promotions to each customer in order to maximize their profit.

Sonae is the food retail leader in Portugal and its loyalty card has the largest user base in the country, which constitutes an important asset to differentiate itself from competitors.

By successfully clustering consumers into segments based on their profitability, Sonae will be able to better position itself on the market and to better fulfil each costumer
expectation.

Additionally, it will understand how to unlock the transition to different segments by consumers, pushing profitability and sales.

Data

• Transaction by day

Expected outcomes

• The creation of a metric to assess more profitable and less profitable costumers
• Clustering of consumers based on their profitability (assuring the stability of its groups)
• Crossing current behaviour with future behaviour (migration matrix)
• As a result of the above, SONAE expects the following outcome:
• Increase average customer profitability in 10%

How do we apply?

• Read the Guidelines for Applicants
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