Customer Segmentationof Bank Customers (Case: SaderatBank of Iran)

Customer cognition, understanding difference between groups of customers and ranking them is one of the important problems in banks and customer-based organizations. To achieve a correct understanding about customers, organizations need a measure to evaluate the importance of different customers. The goal of this research is to present a framework for customer segmentationand their ranking. In this regard, the information of thirty thousand customers of SaderatBank from April 2010 to April 2011 was reviewed. This information includes: date of the last financial transactions, number of transactions and end of time account balance. The data was used for segmenting customers based on Weighted RFM (WRFM) using two step algorithm and so customers were divided into four groups. Then these groups were ranked based on their lifetime value and hidden patterns between the data of retail banking product ownership and customer value-based segmentation was discovered using C5.0 algorithm. The result of this study could be used as a guideline for marketing strategies and developing of services and products for each group in the banking industry.