{"title":"Enhancing Retail Transactions: A Data-Driven Recommendation Using Modified RFM Analysis and Association Rules Mining","authors":"Angela Hsiang-Ling Chen, Sebastian Gunawan","doi":"10.3390/app131810057","DOIUrl":null,"url":null,"abstract":"Retail transactions have become an integral part of the economic cycle of every country and even on a global scale. Retail transactions are a trade sector that has the potential to be developed continuously in the future. This research focused on building a specified and data-driven recommendation system based on customer-purchasing and product-selling behavior. Modified RFM analysis was used by adding two variables, namely periodicity and customer engagement index; clustering algorithm such as K-means clustering and Ward’s method; and association rules to determine the pattern of the cause–effect relationship on each transaction and four types of classifiers to apply and to validate the recommendation system. The results showed that based on customer behavior, it should be split into two groups: loyal and potential customers. In contrast, for product behavior, it also comprised three groups: bestseller, profitable, and VIP product groups. Based on the result, K-nearest neighbor is the most suitable classifier with a low chance of overfitting and a higher performance index.","PeriodicalId":48760,"journal":{"name":"Applied Sciences-Basel","volume":" ","pages":""},"PeriodicalIF":2.5000,"publicationDate":"2023-09-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"1","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Applied Sciences-Basel","FirstCategoryId":"103","ListUrlMain":"https://doi.org/10.3390/app131810057","RegionNum":4,"RegionCategory":"综合性期刊","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"CHEMISTRY, MULTIDISCIPLINARY","Score":null,"Total":0}
引用次数: 1
Abstract
Retail transactions have become an integral part of the economic cycle of every country and even on a global scale. Retail transactions are a trade sector that has the potential to be developed continuously in the future. This research focused on building a specified and data-driven recommendation system based on customer-purchasing and product-selling behavior. Modified RFM analysis was used by adding two variables, namely periodicity and customer engagement index; clustering algorithm such as K-means clustering and Ward’s method; and association rules to determine the pattern of the cause–effect relationship on each transaction and four types of classifiers to apply and to validate the recommendation system. The results showed that based on customer behavior, it should be split into two groups: loyal and potential customers. In contrast, for product behavior, it also comprised three groups: bestseller, profitable, and VIP product groups. Based on the result, K-nearest neighbor is the most suitable classifier with a low chance of overfitting and a higher performance index.
期刊介绍:
Applied Sciences (ISSN 2076-3417) provides an advanced forum on all aspects of applied natural sciences. It publishes reviews, research papers and communications. Our aim is to encourage scientists to publish their experimental and theoretical results in as much detail as possible. There is no restriction on the length of the papers. The full experimental details must be provided so that the results can be reproduced. Electronic files and software regarding the full details of the calculation or experimental procedure, if unable to be published in a normal way, can be deposited as supplementary electronic material.