So today we will talk about problem, purpose of analysis, the way we decide break points, segmentation result, and conclusion.
By doing the fixed basis analysis we can distinguish the segments based on more specific variables, which helps develop more insightful strategies and in turn more likely to lead to revenue growth.
For B2B, We chose revenue and length as our segmentation variables, hoping to find out those who have long term relationship with our company. As for B2C, we used revenue and recency as our variables, trying to identify those who are more likely to be respond to our communication.
So now we are going to talk about how we decide our breakpoints. By Looking at the box plot and frequency table , we decide to use the 95th percentile and 50th percentile , which is around 100 and 1500, to separate big, medium and small buyers.
For length, we decide to use the 80th percentile to separate the old and new buyers.
For B2C customers, we use the 80th percentile, appoximately 100 dollars to separate big and small customers.
As for recency, we decided to use 52 weeks, which equals to a year, as it is a good way to separate those who are easier to be approached by communication.