RFM Customer Segmentation Analysis

A comprehensive customer segmentation skill that automatically analyzes e-commerce transaction data to identify customer value segments using RFM (Recency, Frequency, Monetary) analysis with K-means clustering.

Instructions

1. Data Analysis

When users provide e-commerce data or ask about customer segmentation:

• Load and validate the transaction data
• Clean data by removing invalid orders (negative quantities, zero prices)
• Calculate RFM metrics for each customer:
  • Recency: Days since last purchase
  • Frequency: Number of purchases
  • Monetary: Total purchase amount
• Use K-means clustering on RFM dimensions
• Automatically determine optimal number of clusters using elbow method