A New Approach for Construction of Geodemographic Segmentation Model and Prediction Analysis

Abstract EN

Customer retention is invariably the top priority of all consumer businesses, and certainly it is one of the most critical challenges as well.

Identifying and gaining insights into the most probable cause of churn can save from five to ten times in terms of cost for the company compared with finding new customers.

Therefore, this study introduces a full-fledged geodemographic segmentation model, assessing it, testing it, and deriving insights from it.

A bank dataset consisting 11,000 instances, which consists of 10,000 instances for training and 10,000 instances for testing, with 14 attributes, has been used, and the likelihood of a person staying with the bank or leaving the bank is computed with the help of logistic regression.

Base on the proposed model, insights are drawn and recommendations are provided.

Stepwise logistic regression methods, namely, backward elimination method, forward selection method, and bidirectional model are constructed and contrasted to choose the best among them.

Future forecasting of the models has been done by using cumulative accuracy profile (CAP) curve analysis.