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Customer Portfolio Analysis Using the SOM

Annika H. Holmbom, Tomas Eklund, Barbro Back, Customer Portfolio Analysis Using the SOM. International Journal of Business Information Systems 8(4), 396–412, 2011.

Abstract:

In order to compete for profitable customers, companies are looking to add value using customer relationship management (CRM). One subset of CRM is customer segmentation, which is the process of dividing customers into
groups based upon common features or needs. Segmentation methods can be
used for customer portfolio analysis (CPA), the process of analysing the
profitability of customers. The purpose of this paper is to illustrate how the self-organising map (SOM) can be used for CPA. We segment, identify and
analyse a case organisation’s profitable and unprofitable customers in order to gain knowledge for the organisation to develop its marketing strategies. The results are validated through cross and face validation. The SOM is able to segment the data in an innovative and reliable way and to provide new insights for decision makers.

BibTeX entry:

@ARTICLE{jHoEkBa11a,
  title = {Customer Portfolio Analysis Using the SOM},
  author = {Holmbom, Annika H. and Eklund, Tomas and Back, Barbro},
  journal = {International Journal of Business Information Systems},
  volume = {8},
  number = {4},
  publisher = {Inderscience Publishers},
  pages = {396–412},
  year = {2011},
  keywords = {Customer relationship management; CRM; customer portfolio analysis; CPA; data-driven market segmentation; self-organising map; SOM},
}

Belongs to TUCS Research Unit(s): Data Mining and Knowledge Management Laboratory

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