Customer Segmentation with RFM Model using Fuzzy C-Means and Genetic Programming

Abstract

One of the strategies a company uses to retain its customers is Customer Relationship Management (CRM). CRM manages interactions and supports business strategies to build mutually beneficial relationships between companies and customers. The utilization of information technology, such as data mining used to manage the data, is critical in order to be able to find out patterns made by customers when processing transactions. Clustering techniques are possible in data mining to find out the patterns generated from customer transaction data. Fuzzy C-Means (FCM) is one of the best-known and most widely used fuzzy grouping methods. The iteration process is carried out to determine which data is in the right cluster based on the objective function. The local minimum is the condition where the resulting value is not the lowest value from the solution set. This research aims to solve the minimum local problem in the FCM algorithm using Genetic Programming (GP), which is one of the evolution-based algorithms to produce better data clusters. The result of the research is to compare the application of fuzzy c-means (FCM) and genetic programming fuzzy c-means (GP-FCM) for customer segmentation applied to the Cahaya Estetika clinic dataset. The test results of the GP-FCM yielded an objective function of 20.3091, while for the FCM algorithm, it was 32.44741. Furthermore, evaluating cluster validity using Partition Coefficient (PC), Classification Entropy (CE), and Silhouette Index proves that the results of cluster quality from gp-fcm are more optimal than fcm. The results of this study indicate that the application of genetic programming in the fuzzy c-means algorithm produces more optimal cluster quality than the fuzzy c-means algorithm.