E-Commerce Customer Segmentation & Retention
- 75.1%of revenue comes from 15.3% of customers (VIPs)
- 26%of customers at churn risk = only 5.9% of revenue
- 4.5×higher AOV in a hidden B2B wholesale segment
The problem
A UK-based online retailer had ~400,000 raw transactions but no clear view of who its most valuable customers were or who was about to leave.
Approach
Cleaned anomalies (a fake “whale” cancellation, zero-price samples), engineered an RFM (Recency, Frequency, Monetary) model at customer level and scored clients into 5 business segments with quintile scoring.
Results
- 15.3% of customers (VIPs) drive 75.1% of total revenue.
- 26% of customers are at churn risk, but they represent only 5.9% of revenue.
- Uncovered a hidden B2B wholesale segment with an average order value 4.5× higher than standard clients.
