A Data Mining Approach to Customer Segment Based on Customer Value

Customer segmentation is the basic issue for an effective CRM, and the methods and indicators of segmentation will impact on the results of applications. Many literatures have researched the application of data mining technology in customer segmentation, and achieved sound effectives. But most of them only segment customer by single data mining technology from a special view, rather than from systematical framework. Although previous segment methods may segment customer base into different groups, it is unable to identify customerpsilas capability to create profit directly. In this paper, a customer segmentation framework based on data mining is put forward, and a new customer segmentation method is constituted based on customer lifetime value. The method introduced above has been applied to a data set from a Frequent Flyer Program (FFP) of an airline in China.