Executive Summary
K-means customer segmentation summary
Analysis of 2216 customers identified 4 distinct behavioral personas. The 'Premium' segment is the highest-value group, averaging $1310 in total spend — 783% more than the lowest-value segment. K-means clustering explains 57.5% of total customer variance, confirming that these personas are statistically well-separated and actionable for targeting.
Cluster Profile Summary
Average demographics and spend by customer segment
| Income | Cluster | Recency | Mnt Wines | Mnt Meat Products | Num Store Purchases |
|---|---|---|---|---|---|
| 3.759e+04 | Budget | 49 | 81.9 | 33.3 | 3.8 |
| 7.485e+04 | Premium | 49.5 | 536.8 | 452.6 | 8.3 |
| 7.332e+04 | Tier 1 | 48.2 | 694.1 | 316.7 | 8.6 |
| 5.958e+04 | Tier 2 | 50 | 461 | 191.4 | 7.9 |
Each row represents one customer persona with its average income, recency, and category spend. The 'Premium' segment has the highest average income ($74851) and wine spend ($537 over two years), making it the clearest premium target. Recency scores show how recently each segment purchased — lower values indicate more active customers.
Average Total Spend by Segment
Average 2-year spend across all product categories per segment
The 'Premium' segment outspends all others, averaging $1310 across all product categories over two years. The gap between the top and bottom segments is $1162 — a 783% premium that justifies differentiated acquisition budgets per persona.
Income Distribution by Segment
Household income spread within each customer cluster
The box plot reveals how cleanly household income separates customer segments. Across 2216 customers, the median income is $51382 but varies substantially by cluster. High overlap between cluster income ranges indicates that spending behavior — not income alone — drives cluster membership, underscoring the value of the multi-feature approach.
Spend Category Correlations
Pearson correlations between product spend categories
The heatmap shows Pearson correlations between all spend categories. The strongest cross-category link is between Mnt Fish Products and Mnt Sweet Products (r = 0.58), suggesting these products are frequently bought by the same customers and form a natural bundle. Highly correlated pairs identify cross-sell opportunities where promoting one category to buyers of the other is likely to find a receptive audience.
Purchase Channel Mix by Segment
Average purchases by channel (web, catalog, store) for each segment
Channel preferences differ markedly across segments, informing where to place promotional spend. The 'Tier 1' segment leads in in-store purchases, while other segments may prefer web or catalog channels. Matching campaign delivery channel to segment preference improves conversion rates and reduces wasted impressions.
Income vs. Wine Spend by Segment
Scatter of household income vs. wine spend, colored by cluster
Each point is one customer; color indicates cluster membership. A clear diagonal separation between premium and budget clusters confirms that income and wine spend together are strong discriminators. Customers clustered in the upper-right quadrant (high income, high wine spend) represent the highest-lifetime-value cohort and the most viable target for premium campaigns.
Campaign Acceptance Rate by Segment
Percentage of customers in each segment who accepted at least one campaign
Campaign acceptance rates show which segments are most responsive to promotional offers. The 'Premium' segment accepts campaigns at a 45% rate — 28.6 percentage points above the least responsive segment. Concentrating campaign budget on high-acceptance segments delivers better ROI than blanket campaigns across the entire customer base.