Example of Customer Data for Data Science Problems
Here is a typical customer dataset structure for a retail company:
Annual Income Spending Score (1- Purchased
CustomerID Age Gender Country
($) 100) Product
1001 35 Male 70,000 65 Yes India
1002 42 Female 85,000 80 No USA
1003 28 Female 40,000 30 Yes India
1004 53 Male 90,000 10 No UK
... ... ... ... ... ... ...
Defining a Classification Problem
Example Problem: Given customer attributes (Age, Gender, Income, Country, Spending
Score), predict whether a customer will purchase a particular product (Purchased Product:
Yes/No).
Data Preparation for Classification
Labeling: The target variable is “Purchased Product”, labeled as 1 (Yes) or 0 (No).
Annotation: Ensure all customer instances have their purchase status marked clearly.
Preprocessing:
Convert categorical variables (Gender, Country) to numerical format (e.g., one-hot
encoding).
Handle missing data (fill or remove).
Normalize quantitative fields (Age, Income, Spending Score).
Classification Models to Consider
Logistic Regression
Decision Trees
Random Forest
Support Vector Machines (SVM)
k-Nearest Neighbors (k-NN)
Gradient Boosting Machines (e.g., XGBoost)
Neural Networks
Example Output for Classification Problem
CustomerID Predicted Purchased Product (Yes/No) Probability Yes
1001 Yes 0.82
1002 No 0.15
1003 Yes 0.60
Clustering Problem Definition
Example Problem: Segment customers into groups based on Age, Income, and Spending
Score, without using “Purchased Product”.
Stress: No Target Required in Clustering
Clustering is unsupervised; it does not rely on labeled outcomes.
Example of Clustering
Suppose K-means is used to identify 3 distinct customer clusters:
CustomerID Cluster Label
1001 2
1002 1
1003 3
Customers in the same cluster have similar spending and income profiles.
Clustering Techniques to Consider
K-means Clustering
Hierarchical Clustering
DBSCAN
Gaussian Mixture Models (GMM)
Agglomerative Clustering
Output Example for Clustering
Clustered customer data visualized (usually as a scatter plot with colors for each cluster).
Dimensional Reduction Motivation
Why?: Large customer datasets may have many features (10s or 100s). Dimensional reduction
simplifies analysis, visualization, removes noise, and improves model performance.
Example: Reduce features (Age, Income, Spending Score, Country, Gender) to two principal
components for visualization.
Dimensional Reduction Techniques
Principal Component Analysis (PCA)
t-SNE (t-distributed Stochastic Neighbor Embedding)
Linear Discriminant Analysis (LDA)
Autoencoders (Neural Network based)
Dimensionality Reduction Output Example
Data projection to 2D:
CustomerID PC1 PC2
1001 -1.23 2.35
1002 1.01 -0.89
Visualization: A scatter plot with axes PC1 and PC2.
Regression Problem Definition
Example: Predict a customer’s “Spending Score” based on Age, Gender, Income, and Country.
Regression Techniques to Consider
Linear Regression
Lasso and Ridge Regression
Decision Tree/Random Forest Regressors
Gradient Boosted Regressors
Support Vector Regression (SVR)
Example Output for Regression
CustomerID Actual Spending Score Predicted Spending Score
1001 65 66.4
1002 80 78.2
Model Parameter Fine-Tuning and Optimization
Parameter fine-tuning involves finding hyperparameter values (e.g., tree depth, learning
rate) that optimize model performance.
Techniques: Grid search, random search, Bayesian optimization.
Purpose: Enhance accuracy, generalization, and robustness.
Overfitting vs. Underfitting
Overfitting: Model fits training data too closely, poor on new data; caused by very complex
models.
Underfitting: Model too simple, fails to capture data patterns; high training and test error.
Root Causes
Overfitting: Too many model parameters, too little data.
Underfitting: Model imposed too much bias/restriction, insufficient complexity.
Effect
Overfitting: High variance, poor generalization.
Underfitting: High bias, inaccurate model.
Diagrams
# Simulated: simple illustration (not real plot code)
|\
| \ Underfit: Model is flat line
| \__
| \_ True relationship is curve
| |---|----|
Data Splitting: Train, Validation, Test
Training Set: Used to fit model parameters.
Validation Set: Used to tune hyperparameters, prevent overfitting.
Test Set: Used to evaluate final model generalization.
Example:
60% Training, 20% Validation, 20% Test.
Verify and Review for Each Task
Classification: Check accuracy, confusion matrix, ROC curve, misclassification rate. Review
labeling consistency and distribution.
Clustering: Evaluate using metrics like silhouette score, cluster compactness; review if
clusters make business sense or align with known patterns.
Interpretation in the Data Science Pipeline
Interpretation is understanding what model predictions mean and why models behave a certain
way.
Need: Especially critical in safety-critical domains (healthcare, finance), where model errors
can have severe consequences.
Interpretation Steps for Classification
Feature Importance: Which features most impact predictions?
Error Analysis: Where and why does the model misclassify?
Decision Boundaries: Are the model’s predictions logical?
Explanation Tools: Use SHAP, LIME for local/global interpretability.
Interpretation Steps for Clustering
Cluster Profiles: What characterizes each customer segment?
Centroid Analysis: What is typical of each group?
Business Mapping: Does segmentation align with business intuition?
Visualization: Plot clusters in 2D/3D using reduced dimensions.
Summary:
By using the same customer data, data science can address classification (predicting classes),
clustering (grouping), dimensionality reduction (simplifying), and regression (predicting
numeric outcomes) problems, each with unique preparation, methods, outputs, and
interpretation requirements. Proper model optimization, understanding of overfitting/underfitting,
and result interpretation are critical, especially where real-world impacts are significant.
