Customer Clustering

Customer Segmentation

Marketing campaigns are characterized by focusing on the customer needs and their overall satisfaction. Nevertheless, there are different variables that determine whether a marketing campaign will be successful or not. There are certain variables that we need to take into consideration when making a marketing campaign.

The 4 Ps:
Segment of the Population: To which segment of the population is the marketing campaign going to address and why? This aspect of the marketing campaign is extremely important since it will tell to which part of the population should most likely receive the message of the marketing campaign.

Distribution channel to reach the customer's place: Implementing the most effective strategy in order to get the most out of this marketing campaign. What segment of the population should we address? Which instrument should we use to get our message out? (Ex: Telephones, Radio, TV, Social Media Etc.)

Price: What is the best price to offer to potential clients? (In the case of the bank's marketing campaign this is not necessary since the main interest for the bank is for potential clients to open depost accounts in order to make the operative activities of the bank to keep on running.)

Promotional Strategy: This is the way the strategy is going to be implemented and how are potential clients going to be address. This should be the last part of the marketing campaign analysis since there has to be an indepth analysis of previous campaigns (If possible) in order to learn from previous mistakes and to determine how to make the marketing campaign much more effective.

Project duration varies between 3 weeks – 2 months. The project starts by getting an understanding of the situation and gathering the right data. After collecting the right data, I start analyzing the data and share the results. Finally, I will make the algorithm or model which you can implement in your business.

Months of Marketing Activity: We saw that the the month of highest level of marketing activity was the month of May. However, this was the month that potential clients tended to reject term deposits offers (Lowest effective rate: -34.49%). For the next marketing campaign, it will be wise for the bank to focus the marketing campaign during the months of March, September, October and December. (December should be under consideration because it was the month with the lowest marketing activity, there might be a reason why december is the lowest.)


Seasonality: Potential clients opted to suscribe term deposits during the seasons of fall and winter. The next marketing campaign should focus its activity throghout these seasons.


Campaign Calls: A policy should be implemented that states that no more than 3 calls should be applied to the same potential client in order to save time and effort in getting new potential clients. Remember, the more we call the same potential client, the likely he or she will decline to open a term deposit.


Age Category: The next marketing campaign of the bank should target potential clients in their 20s or younger and 60s or older. The youngest category had a 60% chance of suscribing to a term deposit while the eldest category had a 76% chance of suscribing to a term deposit. It will be great if for the next campaign the bank addressed these two categories and therefore, increase the likelihood of more term deposits suscriptions.

Occupation: Not surprisingly, potential clients that were students or retired were the most likely to suscribe to a term deposit. Retired individuals, tend to have more term deposits in order to gain some cash through interest payments. Remember, term deposits are short-term loans in which the individual (in this case the retired person) agrees not to withdraw the cash from the bank until a certain date agreed between the individual and the financial institution. After that time the individual gets its capital back and its interest made on the loan. Retired individuals tend to not spend bigly its cash so they are morelikely to put their cash to work by lending it to the financial institution. Students were the other group that used to suscribe term deposits.


House Loans and Balances: Potential clients in the low balance and no balance category were more likely to have a house loan than people in the average and high balance category. What does it mean to have a house loan? This means that the potential client has financial compromises to pay back its house loan and thus, there is no cash for he or she to suscribe to a term deposit account. However, we see that potential clients in the average and hih balances are less likely to have a house loan and therefore, more likely to open a term deposit. Lastly, the next marketing campaign should focus on individuals of average and high balances in order to increase the likelihood of suscribing to a term deposit.


Develop a Questionaire during the Calls: Since duration of the call is the feature that most positively correlates with whether a potential client will open a term deposit or not, by providing an interesting questionaire for potential clients during the calls the conversation length might increase. Of course, this does not assure us that the potential client will suscribe to a term deposit! Nevertheless, we don't loose anything by implementing a strategy that will increase the level of engagement of the potential client leading to an increase probability of suscribing to a term deposit, and therefore an increase in effectiveness for the next marketing campaign the bank will excecute.


Target individuals with a higher duration (above 375): Target the target group that is above average in duration, there is a highly likelihood that this target group would open a term deposit account. The likelihood that this group would open a term deposit account is at 78% which is pretty high. This would allow that the success rate of the next marketing campaign would be highly successful.


By combining all these strategies and simplifying the market audience the next campaign should address, it is likely that the next marketing campaign of the bank will be more effective than the current one.