2008 International Conference on Information Management, Innovation Management and Industrial Engineering

Application of Data Mining Classification Algorithms in Customer Membership

Card Classification Model

Lin Zhang, Yan Chen, Yan Liang, Nan Li

College of Transportation and Management,
Dalian Maritime University, Dalian, LiaoNing, 116026, China
joslin_1984@yahoo.cn

Abstract
This paper uses data mining classification algorithms--
C5.0 and CART algorithms to get useful information to
decision-making out of customers’ transaction behaviors.
Firstly, by business understanding, data understanding
and data preparing, modeling and evaluating we get the
results of the two algorithms and by comparing the
results ,we know that the two algorithms can both be
applied in the customer membership card classification
model and can obtain a quite accurate result. Then we
introduce the application of this model. Through analysis,
we get to know customers’ income level and children
number are the two main factors to affect them to choose
cards. Knowing that, enterprises can take corresponding
measures, such as dividing customers into different
groups and then recommending the corresponding card to
the customer who has the similar characteristics. By this
means, enterprises can provide special service to different
card rank users in order to attract more and more
customers.
1. Introduction
Data mining[1] is the process of discovering interesting
knowledge from large amounts of data stored either in
databases, data warehouses, or other information
repositories. In other words, the data you wish to analyze
by data mining techniques are incomplete (lacking
attribute values or certain attributes of interest, or
containing only aggregate data), noisy (containing errors,
or outlier values which deviate from the expected), and
inconsistent (e.g. containing discrepancies in the
department.
The classification analysis is by analyzing the data in
the demonstration database, to make the accurate
description or establish the accurate model or mine the
classifying rule for each category, and then use the
classifying rule to classify records in other databases.
The Food Mart is an international chain store. It is a
mixture of “70% food +20% daily necessities +10%
styles”, which has some especial characteristics especially
in the style and taste. The store has made a high-taste
shopping environment for its customers and has made a
lot of efforts on its operating and personnel disposition in
order to attract more and more high-level consumers.
The international chain store implements membership
card system management which is helpful not only to
accumulate the customer’s information but also to offer
corresponding service for different card-rank users. From
this way we can enhance customers' loyalty to the store.
Therefore, so as to recommend corresponding card to the
appropriate customer, senior managers want to obtain
different card-rank customers’ characteristics and which is
the most important factor that affects the customers to
choose this kind of card not that kind.
SPSS Clementine is an open data mining tool and has
won the British government SMART innovation prize
twice. It not only supports the entire data mining flow
which composes of getting data 、 transferring data 、
modeling、evaluating and deploying, but also supports
the accepted data mining standard-- CRISP-DM(Cross-
Industry Standard Process Data Mining). The
visualization of Clementine makes “thought” possible,
that is, programmers can concentrate on the to-be-solved
problem itself but not be limited to some technical work
(e.g. coding). It has also provides kinds of graphic
techniques which are helpful to understand the key
relation between data and can instruct users to find the
final solution by the most convenient way.
2. Classification Algorithm
Decision Tree is an important model to realize the
classification. It was a learning system—CLS builded by

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DOI 10.1109/ICIII.2008.168
Hunt etc, when they researched on human concept
modeling early in the 1960s. To the late 70s,
J.Ross.Quinlan put forward the ID3 algorithm. In 1975
some people put forward CHAID and the CART
algorithm. In 1986, J.C.Schlimmer put forward the ID4
algorithm. In 1988, P.E.U.tgoff put forward the ID5R
algorithm. In 1993, Quinlan developed C4.5/C5.0
algorithm on basis of the ID3 algorithm[2-6]. Below is the
detailed explanation of the C5.0 algorithm and the CART
algorithm which are used in this paper.
①C5.0 algorithm
C5.0 algorithm is the algorithm in the Clementine
decision tree model. C5.0 is the classification algorithm
which applies in big data set. C5.0 is better than C4.5 on
the efficiency and the memory.
The C5.0 model can split samples on basis of the
biggest information gain field. The sample subset that is
get from the former split will be split afterward. The
process will continue until the sample subset cannot be
split and is usually according to another field. Finally,
examine the lowest level split, those sample subsets that
don’t have remarkable contribution to the model will be
rejected or the trimmed.
② CART algorithm
Classification and Regression Trees (CART) is one of
the classification algorithms. It is a flexible method to
describe how the variable Y distributes after assigning the
forecast vector X.
This model uses the binary tree to divide the forecast
space into certain subsets on which Y distribution is
continuously even. Tree's leaf nodes correspond to
different division areas which are determined by Splitting
Rules relating to each internal node. By moving from the
tree root to the leaf node, a forecast sample will be given
an only leaf node, and Y distribution on this node also be
determined.
This paper chooses SPSS Clementine tool and the
accepted standard---CRISP-DM and applies classification
algorithm to the international chain store.
3. Business Understanding
In commercial operation, using the membership card
service is the most superior method to help the
businessmen to accumulate the customers’ information.
On the one hand they may obtain customers’ basic
information to maintain long-term contact with them. On
the special day, like the holiday or the customer’s
birthday, they can by delivering a warm blessing, promote
customers’ satisfaction. On the other hand, they may
through the customer’s transaction information, like the
purchase volume, the purchase frequency, analyze what is
the value of the customer to the enterprise and analyze the
characteristics of each kind card customers to help the
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enterprise with a clear goal to recommend the card to a
new customer.
This chain store has four kinds of membership cards.
What the businessmen concern about is how to
recommend each card. Therefore, they need to have an
analysis of the historical data of the customers who have
already have cards so that they can get the common
characteristics of users of each type of card. When
recommending card to a new customer, they may
determine that the customer who has the common
characteristic would probably be the corresponding card
user.
4. Data Understanding and Data Preparing
Before modeling, we need to know which fields the
data set does have, how these fields distribute, and
whether they between conceal correlation between each
other and so on. Only having understood these
information, can we decide that using which fields to do
data mining has actual significance.
Through the analysis of the customer basic information
table's attributes, we need to add the Filter module of
Field Ops into the data stream, and remove the
unnecessary fields. For the fields that have been selected,
set their directions in the Direction option. Here, we set
membership card type is the output option, others input
option.
Figure1. Member card classification type setting
In the data understanding stage, by means of analyzing
the characteristics of the primary data, we can make
further understanding of the data distribution and the
affect of various factors to membership card type.
Through the preliminary analysis, we get the statistics of
customer records in the database, the golden card
customers account for 11.65%, the silver card customers
9.34%, the bronze card customers 55.47%, the normal
customers 23.54%.
The following various charts demonstrates the
influence that each condition affects the decision-making
attribute.
 Figure2. Effect of member card’s classification by
country factor

For the customers investigated, the proportion that

accounts for biggest is American customers, next is
Canadians, the smallest is Mexicans.
Figure7. Effect of member card’s classification by
house owner status factor

For the golden card and silver card customers, most of

them have houses. However, for the bronze and normal
card customers, the amount of people who own houses is
Figure3. Effect of member card’s classification by basically equal to that of the people who don’t have
marriage status factor houses.

In the group of golden card customers, the amount of

the married is larger than that of the unmarried. In other
5. Modeling
groups, the amount of the married is basically the same to
In the data source, after setting the type option and
that of the unmarried.
Filter option, we select the attribute items that are needed
while classifying, and add the Sample module to make a
random sampling ,extracting 70% data from the source
data as the training set, the left over 30% as the
examination set. Here we use C5.0 and the CART
algorithm separately to carry on the classification. The
membership card classification flow chart is as follows:

Figure4. Effect of member card’s classification by

income factor

Normal card users are mainly low income customers

whose yearly income is from 10,000 to 30,000. However,
bronze card users are mainly medium income customers
whose yearly income is from 30,000 to 90,000. Figure8. Flow chart of member card classification
model

Classification result of C5.0 algorithm：

Figure5. Effect of member card’s classification by

number of children at home factor

Most of silver, bronze, normal card users don’t have

children. However, most of the golden card customers
have more than three children.

Figure6. Effect of member card’s classification by

education factor Figure9. Classification result of C5.0 model

For the normal card users, their education background Rule summary: Customer whose yearly income is from
is worse compared to other card users. 10,000 to 30,000 is the normal card customer; Customer

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whose yearly income is from 30,000 to 150,000, and
having less than 3 children is the bronze card customer,
having more than 3 children is the golden card customer;
Customer whose yearly income is more than 150,000, and
unmarried is the silver card customer, married is the
golden card customer. Thus, the main factors that have a
big influence on customer rank is the income, child
number and the marital status.
Classification result of C&RT algorithm：
Figure11. Comparison result of C5.0 and C&RT
model by gains parameter
The abscissa is usually for the quantile (according to
confidence descending sequence), the y-coordinate is
accumulation Gains.
The ideal Gains chart should achieve high
accumulation Gains at high in the earlier period, tend very
quickly to 100% and then stay steady.
Response parameter comparison: Response = (number
of hits of quantile accumulation number of hits/ number of
quantile sample) ×100%

Figure10. Classification result of C&RT model

Rule summary: Customer whose yearly income is from

10,000 to 30,000 is the normal card customer; Customer
whose yearly income is from 30,000 to 150,000, and
having less than 3 children is the bronze card customer;
Customer whose yearly income is more than 30,000, and
having more than 3 children is the golden card customer;
Customer whose yearly income is more than 150,000, and
having less than 3 children is the silver card customer.
Comparing the two classification algorithm we can
reach such a conclusion: The main factors that have a big
influence on customer ranks are the income and child
number. Normal card customers, bronze card customers
and golden card customers that are obtained from the two
methods are basically the same. The two results only have
a little difference on silver card customers. The result of
C5.0 is customer whose yearly income is more than
150,000 and unmarried is the silver card customer, while
the result of C&RT is customer whose yearly income is
more than 150,000, and having less than 3 children is the
silver card customer.
Figure12. Comparison result of C5.0 and C&RT
model by response parameter
The abscissa is usually for the quantile (according to
confidence descending sequence), the y-coordinate is
accumulation--Response.
The ideal Response chart should maintain a section in
the high accumulation, and then rapidly drop.
Model evaluation: From the chart we can see that the
classified effects of the two methods are basically the
same. Therefore, these two kinds of models can be used in
the card classification.
(2)Quantitative analysis: From the following chart we
can see that the accuracy of C5.0 algorithm model is
82.53%, C&RT 82.24%, the uniformity of the two kinds
of models is 98.75%.

6. Evaluating

In this paper, we are from qualitative and quantitative

perspectives to evaluate and compare the two algorithm
models.
(1) Qualitative analysis: We select Gains and the
Response parameter to carry on comparison.
The Gains parameter:
Gains= number of hits of quantile accumulation /total
number of hits ×100%

Figure13. Quantitative comparison result of C5.0 and

C&RT model

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 Therefore, these two algorithms may have a very good
application in the customer membership card
classification model and obtain a quite accurate result.

7. Application

As we have known, the main factors affecting the card

ranks are the income and child number. Therefore, we are
able to take the two attributes as the main standards to
recommend card to a new customer. Moreover, we can
refer to other attributes to help judge which card to
recommend.

8. Conclusions

Applying data mining classification algorithm in the

customer membership card classification model can help
the enterprise with a clear goal to recommend the
corresponding membership card to the customer in order
to provide the special service for each kind of card users,
and is helpful to enterprise's development.

9. References

[1] Jiawei Han, Michelin Kamber, “Data Mining Concepts and

Techniques” [M], Morgan Kaufmann publishers, USA,
2001, 70-181.

[2] Hunt E B, J Marin, Stone P T, “Experiments in Induction”,

[M], Academic Press, 1996.

[3] Quinlan J R, “Induction of Decision Trees”, [J], Machine

Learning, 1986.

[4] Quinlan J R, “C4.5: Programs for Machine Learning”, [M],

San Mateo, CA: Morgan Kaufman Publishers, 1993.

[5] Quinlan J R, “Programs for Machine Learning”, [M],

Morgan Kaufman, 1992.

[6] Quinlan J R, “Bagging, Boosting and C4.5”, [A], In

Proceedings of the 13th National Conference Artificial
Intelligence, Portland, Ore, 1996:725-730.

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