Relationship between product based loyalty and clustering based on supermarket visit and spending patterns

Abstract

Loyalty of customers to a supermarket can be measured in a variety of ways. If a customer tends to buy from certain categories of products, it is likely that the customer is loyal to the supermarket. Another indication of loyalty is based on the tendency of customers to visit the supermarket over a number of weeks. Regular visitors and spenders are more likely to be loyal to the supermarket. Neither one of these two criteria can provide a complete picture of customers’ loyalty. The decision regarding the loyalty of a customer will have to take into account the visiting pattern as well as the categories of products purchased. This paper describes results of experiments that attempted to identify customer loyalty using thes e two sets of criteria separately. The experiments were based on transactional data obtained from a supermarket data collection program. Comparisons of results from these parallel sets of experiments were useful in fine tuning both the schemes of estimating the degree of loyalty of a customer. The project also provides useful insights for the development of more sophisticated measures for studying customer loyalty. It is hoped that the understanding of loyal customers will be helpful in identifying better marketing strategies.