Customer behavior analysis using rough set approach

Abstract

The customer relationship management (CRM) is a business methodology used to build long term profitable customers by analyzing customer needs and behaviors. The customer behavior is analyzed by choosing important attributes in the customer database. The customers are then segmented into groups according to their attribute values. The rules are generated using rule induction algorithms to describe the customers in each group. These rules can be used by the entrepreneur to predict the behavior of their new customers and to vary the attraction process for existing customers. In this paper a new rule algorithm has been proposed based on the concepts of rough set theory. Its performance has been compared with LEM2 (Learning from Examples Module, version 2) algorithm, an existing rough set based rule induction algorithm. Real data set of the customer transaction is used for analysis. Recency(R), Frequency (F), Monetary (M) and Payment (P) are the attributes chosen for analyzing customer data. The proposed algorithm on average achieves 0.439% increase in sensitivity, 0.007% increase in specificity, 0.151% increase in accuracy, 0.014% increase in positive predictive value, 0.218% increase in negative predictive value and 0.228% increase in F-measure when compared to LEM2 algorithm. © 2013 Universidad de Talca - Chile.