Understanding Prediction Model
About ElecMart
ElecMart, as the name suggests is a supermarket for Electronics. They serve the needs of both, retail clients and various corporate clients. Customers not only get to see and feel a wide range of products, they also receive exciting discounts and excellent customer service. ElecMart started in 1999 and launched a customer loyalty program in 2003. ElecMart aims to be largest Electronic superstore across the nation, but they have a big hurdle ahead!
The problem - Where are the recurring buyers?
The loyalty program is meant for customers who want to take benefit from repeat purchases and register at the time of purchase. 14
They need to present the loyalty card at Point of Sale at time of purchase and the benefits are non-transferrable. Also corporate sales automatically get the benefits of the loyalty program. In a recent benchmarking activity and market survey which ElecMart sponsored, it was found that the "Repeat purchase rate" i.e. customer who come again for purchases from these customers is very low compared to other competitors. Increasing sales to these customers is the only way to run a successful loyalty program.
Data
Transaction_ID Unique ID of the transaction. Can not be used for modeling
Transaction_Date Date on which the transaction took place
Store_ID ID of the store in which the purchase was made
Number_of_EMI Number of EMI opted by the customer
Purchased_in_Sale Whether the transacted item was under offer
Var1 - Var3 Masked categorical variable
Client_ID Unique ID of the customer making the purchase.
Gender Gender of the customer
DOB Date of Birth of the customer
Referred_Friend Whether the customer referred a friend at time of purchase
Sales_Executive_ID ID of the Sales executive who helped the customer with
the purchase
SALES_Executive_Category Category of the sales executive who helped the
customer with the purchase
Lead_Source_Category Channel from which the customer came to know about
the store and made the purchase (last source attribution)
Payment_Mode Mode of the payment for the transaction
Product_Category Category of the product purchased
Transaction_Amount Amount of the transaction
**If You are expected to identify the probabilty of the each customer (in the
loyalty program) making a purchase in next 12 months.**
Kindly Guide Me which model will be suitable here and what dependent variable i
should use? 7