Customer Choice Modelling: A Multi-Level Consensus Clustering Approach

Abstract

Customer Choice Modeling aims to model the decision-making process of customers, or segments of customers, through their choices and preferences identified by the analysis of their behaviors in one or more specific contexts. Clustering techniques are used in this context to identify patterns in their choices and preferences, to define segments of customers with similar behaviors, and to model how customers of different segments respond to competing products and offers. However, data clustering is an unsupervised learning task by nature, that is the grouping of customers with similar behaviors in clusters must be performed without prior knowledge about the nature and the number of intrinsic groups of data instances, i.e., customers, in the data space. Thus, the choice of both the clustering algorithm used and its parameterization, and of the evaluation method used to assess the relevance of the resulting clusters are central issues. Consensus clustering, or ensemble clustering, aims to solve these issues by combining the results of different clustering algorithms and parameterizations to generate a more robust and relevant final clustering result. We present a Multi-level Consensus Clustering approach combining the results of several clustering algorithmic configurations to generate a hierarchy of consensus clusters in which each cluster represents an agreement between different clustering results. A closed sets based approach is used to identified relevant agreements, and a graphical hierarchical representation of the consensus cluster construction process and their inclusion relationships is provided to the end-user. This approach was developed and experimented in travel industry context with Amadeus SAS. Experiments show how it can provide a better segmentation, and refine the customer segments by identifying relevant sub-segments represented as sub-clusters in the hierarchical representation, for Customer Choice Modeling. The clustering of travelers was able to distinguish relevant segments of customers with similar needs and desires (i.e., customers purchasing tickets according to different criteria, like price, duration of flight, lay-over time, etc.) and at different levels of precision, which is a major issue for improving the personalization of recommendations in flight search queries.