What is cluster analysis: An algorithmic technique, also known as “clustering,” used to organize large, diverse groups into subsets of smaller, more similar groups.
What cluster analysis is not: Basic segmentation where the analyst arbitrarily decides to focus on one or two defining variables to divide the population into groups of users.
Why cluster analysis matters: Cluster analysis allows you to use as many variables as you would like to define subsets of users. The procedure leverages variable selection and similarity measures to find the most meaningful groups of like-minded customers, allowing for more effective personalization. Clustering gives you the opportunity to address the specific needs and desires of the individual you’re messaging.
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