{"id":3380,"date":"2023-08-31T10:59:22","date_gmt":"2023-08-31T10:59:22","guid":{"rendered":"https:\/\/neuraldesigner.com\/blog\/customer_segmentation_using_advanced_analytics\/"},"modified":"2025-09-12T17:48:49","modified_gmt":"2025-09-12T15:48:49","slug":"customer_segmentation_using_advanced_analytics","status":"publish","type":"blog","link":"https:\/\/www.neuraldesigner.com\/blog\/customer_segmentation_using_advanced_analytics\/","title":{"rendered":"Customer targeting using machine learning"},"content":{"rendered":"<p><a href=\"https:\/\/www.neuraldesigner.com\/solutions\/customer-segmentation\">Customer targeting<\/a> is the process of analyzing customer features (such as age, education, interests, and spending habits) to select those customers who are more prone to a target product or service.<\/p>\n<section>Companies from\u00a0<span style=\"box-sizing: border-box; margin: 0px; padding: 0px;\">various industries have recognized that\u00a0<a href=\"https:\/\/www.neuraldesigner.com\/blog\/what_is_advanced_analytics\" target=\"_blank\" rel=\"noopener\">advanced analytics\u00a0<\/a>can identify potential clients more effectively than traditional methods, enabling the design of more targeted and <\/span>effective marketing campaigns.<\/p>\n<h2>Contents<\/h2>\n<ul>\n<li><a href=\"#AdvancedAnalytics\">Advanced analytics<\/a>.<\/li>\n<li><a href=\"#CaseStudy\">Case study<\/a>.<\/li>\n<li><a href=\"#DescriptiveAnalytics\">Descriptive analytics<\/a>.<\/li>\n<li><a href=\"#DiagnosticAnalytics\">Diagnostic analytics<\/a>.<\/li>\n<li><a href=\"#PredictiveAnalytics\">Predictive analytics<\/a>.<\/li>\n<li><a href=\"#PrescriptiveAnalytics\">Prescriptive analytics<\/a>.<\/li>\n<li><a href=\"#Conclusions\">Conclusions<\/a>.<\/li>\n<\/ul>\n<\/section>\n<section id=\"AdvancedAnalytics\">\n<h2>Advanced analytics<\/h2>\n<p>The volume, variety, and velocity of information stored in organizations have increased significantly.<\/p>\n<p>The intelligent analysis of these data can differentiate companies that adopt this technique.<\/p>\n<p>However, most companies only perform descriptive analyses of their data to understand past trends.<\/p>\n<p>These organizations can get more value from their data by using more sophisticated techniques.<\/p>\n<p>This process is known as <a href=\"https:\/\/www.neuraldesigner.com\/blog\/what_is_advanced_analytics\">advanced analytics<\/a>, and it is illustrated in the following figure.<\/p>\n<p><img decoding=\"async\" style=\"width: 500px;\" src=\"https:\/\/www.neuraldesigner.com\/images\/advanced_analytics.webp\" \/><\/p>\n<p>As we can see, <a href=\"https:\/\/www.neuraldesigner.com\/blog\/what_is_advanced_analytics#DescriptiveAnalytics\">advanced analytics<\/a> comprises 4 steps:<\/p>\n<ol>\n<li><a href=\"https:\/\/www.neuraldesigner.com\/blog\/what_is_advanced_analytics#DescriptiveAnalytics\">Descriptive analytics<\/a>: It answers the question of <em>what happened?<\/em><\/li>\n<li><a href=\"https:\/\/www.neuraldesigner.com\/blog\/what_is_advanced_analytics#DiagnosticAnalytics\">Diagnostic analytics<\/a>: It answers the question of <em>why did it happen?<\/em><\/li>\n<li><a href=\"https:\/\/www.neuraldesigner.com\/blog\/what_is_advanced_analytics#PredictiveAnalytics\">Predictive analytics<\/a>: It answers the question of <em>what will happen?<\/em><\/li>\n<li><a href=\"https:\/\/www.neuraldesigner.com\/blog\/what_is_advanced_analytics#PrescriptiveAnalytics\">Prescriptive analytics<\/a>: It answers the question of <em>how we can make it happen?<\/em><\/li>\n<\/ol>\n<p>As we will see\u00a0<span style=\"box-sizing: border-box; margin: 0px; padding: 0px;\">in this post,\u00a0<a href=\"https:\/\/www.neuraldesigner.com\/blog\/what_is_advanced_analytics\" target=\"_blank\" rel=\"noopener\">advanced analytics<\/a> enable us to select individual targets, resulting<\/span>\u00a0in increased profitability.<\/p>\n<\/section>\n<section id=\"CaseStudy\">\n<h2>Case study<\/h2>\n<p>To illustrate the <a href=\"https:\/\/www.neuraldesigner.com\/blog\/what_is_advanced_analytics\">advanced analytics<\/a> process, we will apply descriptive, diagnostic, predictive, and prescriptive analytics to a\u00a0<span style=\"box-sizing: border-box; margin: 0px; padding: 0px;\">real dataset from a banking institution<\/span>.<\/p>\n<p>This case study is solved with the data science and machine learning platform <a href=\"https:\/\/www.neuraldesigner.com\/\">Neural Designer<\/a>. The following figure is a screenshot of this software.<\/p>\n<p><img decoding=\"async\" style=\"width: 400px; max-width: 100%;\" src=\"https:\/\/www.neuraldesigner.com\/images\/neural-designer-screenshot.webp\" \/><\/p>\n<p>The goal is to select customers with a similar profile to those who have purchased the product and include them in a targeted marketing campaign.<\/p>\n<p>The\u00a0<span style=\"box-sizing: border-box; margin: 0px; padding: 0px;\"><a href=\"https:\/\/www.neuraldesigner.com\/learning\/tutorials\/data-set\" target=\"_blank\" rel=\"noopener\">dataset<\/a>\u00a0consists of 1,000,000 clients (or\u00a0<a href=\"https:\/\/www.neuraldesigner.com\/learning\/tutorials\/data-set#Instances\" target=\"_blank\" rel=\"noopener\">instances<\/a>), each <\/span>with 500 features (or <a href=\"https:\/\/www.neuraldesigner.com\/learning\/tutorials\/data-set#Variables\">variables<\/a>).<\/p>\n<p>The following table summarizes the\u00a0<span style=\"box-sizing: border-box; margin: 0px; padding: 0px;\">characteristics of the data set<\/span>.<\/p>\n<table>\n<tbody>\n<tr>\n<th>Number of customers:<\/th>\n<td>1,000,000<\/td>\n<\/tr>\n<tr>\n<th>Number of features:<\/th>\n<td>500<\/td>\n<\/tr>\n<tr>\n<th>Total data:<\/th>\n<td>500,000,000<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>Some types of\u00a0<a href=\"https:\/\/www.neuraldesigner.com\/learning\/tutorials\/data-set#Variables\">variables<\/a> in our\u00a0<a href=\"https:\/\/www.neuraldesigner.com\/learning\/tutorials\/data-set\">data set<\/a>\u00a0are the following:<\/p>\n<ul>\n<li><b>Customer variables<\/b>: Sex, age, nationality&#8230;<\/li>\n<li><b>Company variables<\/b>: Company reputation, number of web visits, marketing expenses&#8230;<\/li>\n<li><b>Product variables<\/b>: Price, conditions&#8230;<\/li>\n<li><b>Engagement variables<\/b>: Last purchase, number of purchases, total amount spent&#8230;<\/li>\n<\/ul>\n<p>Please note that the\u00a0<a href=\"https:\/\/www.neuraldesigner.com\/learning\/tutorials\/data-set\" target=\"_blank\" rel=\"noopener\">dataset<\/a> has been anonymized to protect the company&#8217;s privacy.<\/p>\n<p>The <a href=\"https:\/\/www.neuraldesigner.com\/learning\/tutorials\/data-set#TargetVariables\">target variable<\/a> is the purchase of a given product or service. This is a binary variable with a value of 1 if the customer has purchased the product and 0 if they haven&#8217;t.<\/p>\n<\/section>\n<section id=\"DescriptiveAnalytics\">\n<h2>Descriptive analytics<\/h2>\n<p><a href=\"https:\/\/www.neuraldesigner.com\/blog\/what_is_advanced_analytics#DescriptiveAnalytics\">Descriptive analytics<\/a> is the first stage of\u00a0<a href=\"https:\/\/www.neuraldesigner.com\/blog\/what_is_advanced_analytics\">advanced analytics<\/a>. It answers the question <em>What happened?<\/em><\/p>\n<p>It is essential to know the acceptance ratio of our product or service among our clients.<\/p>\n<p>The next pie chart shows the\u00a0<a href=\"https:\/\/www.neuraldesigner.com\/learning\/tutorials\/data-set#Distributions\">distribution<\/a>\u00a0of the purchase variable.<\/p>\n<p><img decoding=\"async\" src=\"https:\/\/www.neuraldesigner.com\/images\/customer-targeting-target-distribution.webp\" \/><\/p>\n<article class=\"text-token-text-primary w-full focus:outline-none scroll-mt-[calc(var(--header-height)+min(200px,max(70px,20svh)))]\" dir=\"auto\" tabindex=\"-1\" data-turn-id=\"request-68c14edc-00d8-832b-af79-36da58cd2575-11\" data-testid=\"conversation-turn-88\" data-scroll-anchor=\"true\" data-turn=\"assistant\">\n<div class=\"text-base my-auto mx-auto pb-10 [--thread-content-margin:--spacing(4)] thread-sm:[--thread-content-margin:--spacing(6)] thread-lg:[--thread-content-margin:--spacing(16)] px-(--thread-content-margin)\">\n<div class=\"[--thread-content-max-width:40rem] thread-sm:[--thread-content-max-width:40rem] thread-lg:[--thread-content-max-width:48rem] mx-auto max-w-(--thread-content-max-width) flex-1 group\/turn-messages focus-visible:outline-hidden relative flex w-full min-w-0 flex-col agent-turn\" tabindex=\"-1\">\n<div class=\"flex max-w-full flex-col grow\">\n<div class=\"min-h-8 text-message relative flex w-full flex-col items-end gap-2 text-start break-words whitespace-normal [.text-message+&amp;]:mt-5\" dir=\"auto\" data-message-author-role=\"assistant\" data-message-id=\"7b071f1e-3be6-4011-935a-7f91ee4d8847\" data-message-model-slug=\"gpt-5\">\n<div class=\"flex w-full flex-col gap-1 empty:hidden first:pt-[3px]\">\n<div class=\"markdown prose dark:prose-invert w-full break-words light markdown-new-styling\">\n<p data-start=\"0\" data-end=\"102\" data-is-last-node=\"\" data-is-only-node=\"\">As shown, fewer than 1% of customers purchased the product, compared to the vast majority who did not.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/article>\n<\/section>\n<h2>Diagnostic analytics<\/h2>\n<p><a href=\"https:\/\/www.neuraldesigner.com\/blog\/what_is_advanced_analytics#DiagnosticAnalytics\">Diagnostic analytics<\/a> is the second phase of <a href=\"https:\/\/www.neuraldesigner.com\/blog\/what_is_advanced_analytics\">advanced analytics<\/a>. It answers the question <em>Why did it happen?<\/em><\/p>\n<p>This phase provides us with insights into the factors that impact our decision to purchase a product or service.<\/p>\n<p>To discover that, we can calculate the\u00a0<a href=\"https:\/\/www.neuraldesigner.com\/learning\/tutorials\/data-set#InputsTargetsCorrelations\">input-target correlations<\/a>.<\/p>\n<p><img decoding=\"async\" src=\"https:\/\/www.neuraldesigner.com\/images\/customer-targeting-top-correlations.webp\" \/><\/p>\n<p>All <a href=\"https:\/\/www.neuraldesigner.com\/learning\/tutorials\/data-set#InputVariables\">input variables<\/a> show low correlation with the <a href=\"https:\/\/www.neuraldesigner.com\/learning\/tutorials\/data-set#InputVariables\">target<\/a> (below 20%), meaning no single feature strongly drives purchases.<\/p>\n<p>&nbsp;<\/p>\n<p>This indicates a complex problem where multiple factors matter.<\/p>\n<p>The most correlated features are those linked to customer engagement.<\/p>\n<section id=\"PredictiveAnalytics\">\n<h2>Predictive analytics<\/h2>\n<p><a href=\"https:\/\/www.neuraldesigner.com\/blog\/what_is_advanced_analytics#PredictiveAnalytics\">Predictive analytics<\/a> is the third stage of <a href=\"https:\/\/www.neuraldesigner.com\/blog\/what_is_advanced_analytics\">advanced analytics<\/a>. It answers the question of <em>&#8220;What will happen?<\/em><\/p>\n<p><a href=\"https:\/\/www.neuraldesigner.com\/learning\/neural-networks-tutorial\">Neural networks<\/a>\u00a0are one of the most powerful techniques for building predictive models. These are mathematical algorithms that discover patterns from data by emulating the functioning of the human brain.<\/p>\n<p>For our case study, the <a href=\"https:\/\/www.neuraldesigner.com\/learning\/neural-networks-tutorial\">neural network<\/a> takes as input the customer, company, product, and engagement factors and produces as output the probability that the customer will purchase the product.<\/p>\n<p>The following graph illustrates this neural network.<\/p>\n<p><img decoding=\"async\" style=\"width: 600px; max-width: 100%;\" src=\"https:\/\/www.neuraldesigner.com\/images\/customer-targeting-neural-network.webp\" \/><\/p>\n<p>As we can see, <a href=\"https:\/\/www.neuraldesigner.com\/learning\/neural-networks-tutorial\">neural networks<\/a> can analyze any number and type of factors.<\/p>\n<\/section>\n<section id=\"PrescriptiveAnalytics\">\n<h2>Prescriptive analytics<\/h2>\n<p><a href=\"https:\/\/www.neuraldesigner.com\/blog\/what_is_advanced_analytics#DescriptiveAnalytics\">Prescriptive analytics<\/a>\u00a0is the fourth and last step of <a href=\"https:\/\/www.neuraldesigner.com\/blog\/what_is_advanced_analytics\">advanced analytics<\/a>. It answers the question <em>How can we make it happen?<\/em><\/p>\n<p>After building the predictive model, we exploit it to maximize our benefits. To achieve this, we design a marketing campaign targeting customers with the highest likelihood of purchasing the product.<\/p>\n<p>We will assume that the unit cost per contact with each potential customer is 10 USD and that the unit benefits if they buy the product are 1,000 USD.<\/p>\n<p>The <a href=\"https:\/\/www.neuraldesigner.com\/learning\/tutorials\/testing-analysis#ProfitChart\">profit chart<\/a> simulates the benefit without applying the predictive model (grey line) and applying it (blue line).<\/p>\n<p><img decoding=\"async\" src=\"https:\/\/www.neuraldesigner.com\/images\/customer-targeting-profit-chart.webp\" \/><\/p>\n<\/section>\n<p>Without the predictive model, contacting more clients leads to losses due to the low conversion rate (0.6%).<\/p>\n<p>By focusing only on the 20% most likely to buy, the model turns losses of about -$15,000 into profits of around $40,000.<\/p>\n<section id=\"Conclusions\">\n<h2>Conclusions<\/h2>\n<p><a href=\"https:\/\/www.neuraldesigner.com\/blog\/what_is_advanced_analytics#PrescriptiveAnalytics\">Advanced Analytics<\/a> analyzes all types of data to target the most profitable clients accurately.<\/p>\n<p>This type of personalized marketing can significantly increase a company&#8217;s profits.<\/p>\n<p><a href=\"https:\/\/www.neuraldesigner.com\/\">Neural Designer<\/a> is a data science and machine learning platform that allows you to apply advanced analytics easily.<\/p>\n<p>You can download a free trial <a href=\"https:\/\/www.neuraldesigner.com\/free-trial\">here<\/a>.<\/p>\n<\/section>\n<section>\n<h2>Related posts<\/h2>\n<\/section>\n","protected":false},"author":13,"featured_media":2330,"template":"","categories":[],"tags":[42],"class_list":["post-3380","blog","type-blog","status-publish","has-post-thumbnail","hentry","tag-retail"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.4 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ 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