Retailers spend a considerable amount of time, effort, and money to acquire a new customer. However once a customer has been acquired, the maximum value can only be derived if the customer becomes a repetitive buyer and his/her purchase amounts increase with time. Identifying which customer will qualify for a promotion is a key to this problem and our study makes an attempt to solve this issue. Our model predicts the future shopping basket value of a customer. Basis this prediction, every week top 10% customers will be identified and the store will email the promotional discount coupons to these customers.
Accuracy of model will be another deciding factor in the overall scheme of business strategy. A miss out on a probable loyal customer could impact the long term customer life time value associated. As the hypermarket, we are interested in predicting the average basket value of the next customer who walks in based on his/her demographic data as well as his previous purchase pattern prior to this visit.