PurTreeClust: A Clustering Algorithm for Customer Segmentation from Massive Customer Transaction Data

Xiaojun Chen, Yixiang Fang, Min Yang, Feiping Nie, Zhou Zhao, Joshua Zhexue Huang

Abstract: Clustering of customer transaction data is an important procedure to analyze customer behaviors in retail and e-commerce companies. Note that products from companies are often organized as a product tree, in which the leaf nodes are goods to sell, and the internal nodes (except root node) could be multiple product categories. Based on this tree, we propose the “personalized product tree”, named purchase tree, to represent a customer's transaction records. So the customers' transaction data set can be compressed into a set of purchase trees. We propose a partitional clustering algorithm, named PurTreeClust, for fast clustering of purchase trees. A new distance metric is proposed to effectively compute the distance between two purchase trees. To cluster the purchase tree data, we first rank the purchase trees as candidate representative trees with a novel separate density, and then select the top k customers as the representatives of k customer groups. Finally, the clustering results are obtained by assigning each customer to the nearest representative. We also propose a gap statistic based method to evaluate the number of clusters. A series of experiments were conducted on ten real-life transaction data sets, and experimental results show the superior performance of the proposed method.