A deep-dive into BG-NBD, an influential hierarchical model that facilitates a understanding of customers’ purchase behavior — Importance of customer lifetime value Customer lifetime value (CLV) is the total worth of a customer to a company over the length of his relationship. In practice, this “worth” can be defined as revenue, profit, or other metrics of an analyst’s choosing. CLV is an important metric to track for two reasons. First, the totality…

In this post, I briefly go over the concept of an unsupervised learning method, the Gaussian Mixture Model, and its implementation in Python. — The Gaussian mixture model (GMM) is well-known as an unsupervised learning algorithm for clustering. Here, “Gaussian” means the Gaussian distribution, described by mean and variance; mixture means the mixture of more than one Gaussian distribution. The idea is simple. Suppose we know a collection of data points are from a…