Soft Computing

https://doi.org/10.1007/s00500-020-04988-4 (0123456789().,-volV)(0123456789().
,- volV)

METHODOLOGIES AND APPLICATION

Determination of Customer Satisfaction using Improved K-means

algorithm
Hamed Zare1 • Sima Emadi1

 Springer-Verlag GmbH Germany, part of Springer Nature 2020

Abstract
Effective management of customer’s knowledge leads to efficient Customer Relationship Management (CRM). To
accurately predict customer’s behaviour, clustering, especially K-means, is one of the most important data mining tech-
niques used in customer relationship management marketing, with which it is possible to identify customers’ behavioural
patterns and, subsequently, to align marketing strategies with customer preferences so as to maintain the customers.
However, it has been observed in various studies on K-means clustering that customers with different behavioural indi-
cators in clustering may seem to be the same, implying that customer behavioural indicators do not play any significant role
in customer clustering. Therefore, if the level of customer participation depends on behavioural parameters such as their
satisfaction, it can have a negative effect on the K-means clusters and has no acceptable result. In this paper, customer
behavioural features—malicious feature—is considered in customer clustering, as well as a method for finding the optimal
number of clusters and the initial values of cluster centres to obtain more accurate results. Finally, according to the
organizations’ need to extract knowledge from customers’ views through ranking customers based on factors affecting
customer value, a method is proposed for modelling their behaviour and extracting knowledge for customer relationship
management. The results of the evaluation of the customers of Hamkaran System’s Company show that the improved K-
means method proposed in this paper outperforms K-means in terms of speed and accuracy.

Keywords Customer relationship management  K-means  Customer life cycle value  Data mining  Customer satisfaction

1 Introduction management and sales staff or organization services can adapt

The interaction between organizations and customers has
significantly changed so that there are no long-term guaran-
tees of business continuity with customers. However, orga-
nizations need to properly identify their customers, anticipate
their needs and expectations, and increase their productivity
using this type of information (Erdil and Öztürk 2016; Lau-
don and Laudon 2015; Shatnawi et al. 2017). A simple
example of Customer Relationship Management (CRM) is
customers’ information for an organization, where
Communicated by V. Loia.
& Sima Emadi
emadi@iauyazd.ac.ir
Hamed Zare
ms.hzare@iauyazd.ac.ir
1
Department of Computer Engineering, Yazd Branch, Islamic
Azad University, Yazd, Iran
their customers’ needs to their products, remind them of their
service needs, or perform the right-time management. In this
regard, marketing department in each company should work
with an organized effort to collect and organize customer
information. This information is valuable to sailing unit to
contact the customer and provide good services, and it is also
valuable to a senior manager for large organization decisions.
Customer relationship management is a strategy used by
organizations as a valuable source for increasing customer
loyalty and satisfaction, aimed at supporting business
activities to achieve competitive ability (Erdil and Öztürk
2016; Gayathri and Mohanavalli 2011; Laudon and Laudon
2015; Prabha and Subramanian 2017; Shatnawi et al.
2017). It also includes a set of processes that enable
organizations to support business strategies to build long-
term, profitable relationships with specific customers (Ra-
jeh et al. 2014).
However, most of the CRM methods are based on infor-
mation technology and decision-makers should inevitably

123

manage customers’ knowledge to achieve effective customer
relationship management (Dyche 2002). Managers should
determine the priority of different groups of customers so that
they can concentrate on main customers. This shows the
situations where customers may be lost as a result of not
receiving appropriate services. The issue is extremely critical
as customers’ switching to a competitor company leaves
negative impacts on the company’s reputation, financial loss,
and credibility (Ansari and Riasi 2016). Therefore, new
technologies, data mining in particular, can be applied to
discover the knowledge from the customers’ information, also
to analyse them (Szulanski 1996).
However, one of the most important data mining tech-
niques is clustering which is used for developing CRM and
customer management (He and Song 2009; Kafashpour
et al. 2012; Maryani and Riana 2017; Yuliari et al. 2015).
Clustering methods can partition customers’ assessments
data into clusters. Then, managers will develop their CRM
and provide assist for different customer clusters according
to their preferences.
Creating unsuitable clusters is due to the lack of con-
sideration of malicious customers who can have a negative
impact on it. However, an improved K-means method is
proposed in the present research to partition customers into
clusters according to features such as length, recency,
frequency, monetary, and malicious features. In the pro-
posed method, first the malicious customers, who have a
deductive effect on the result, are identified as outlier data
and then removed from the data set. Then, a new method is
presented for determining the centres of the clusters based
on LRFMM2model in order to generate the best initial
clusters. In the proposed method, unlike K-means where
the number of clusters is not known from the beginning and
is achieved with several repetitions, clustering is started
with a cluster and then added to their number, so that the
number of optimum clusters is determined with more
accuracy and in short time.
The rest of the paper is organized as follows: in Sect. 2,
related works will be described. Then, Sect. 3 describes a
new method based on malicious customers for identifying
outlier data, and improved K-means clustering is presented.
In Sect. 4, the evaluation of the proposed approach is
discussed and the results are expressed. Finally, Sect. 5
presents the conclusion.
2 Related work
The related works in this research are divided into two
parts. The first section reviews K-means optimization
algorithms, and the second part focuses on CRM
improvement based on data mining algorithms.
123
H. Zare, S. Emadi
2.1 K-means optimization algorithms
Hierarchical clustering and partition clustering are two of
the most extensively employed clustering methods (Jain
et al. 1999). K-means clustering algorithm, as the most
commonly used partition method (MacQueen 1967), is
aimed at minimizing the sum of squared Euclidean dis-
tances from the mean value of each group (SSEDM)
(Celebi et al. 2013).
The K-means algorithm has been used independently or
in combination with other algorithms in many applications
such as disease diagnosis (Riveros et al. 2019; Nithya et al.
2020; Qiao et al. 2019; Bablani et al. 2020), anomaly
detection (Karczmarek et al. 2020), task allocation strategy
(Sharma and Bala 2020), air pollution analysis (Govender
and Sivakumar 2019) network (Fadaei and Khasteh 2019;
Žiberna 2020), sparse and high-dimensional data clustering
(Hussain and Haris 2019), outlier detection (Jones et al.
2020), and privacy preserving (Jiang et al. 2020; Lin 2020).
For this reason, a lot of research has been done to solve
problems and to improve the K-means algorithm, some of
which are mentioned below.
An iterative approach was introduced by Ismkhan
(2018) to promote the quality of the solution produced by
the K-means through removing one cluster (minus),
dividing another one (plus), and performing re-clustering in
each iteration. According to previous studies, I–K-
means - ? outperforms K-means ??. Moreover, I-K-
means - ? has higher precision than other similar meth-
ods regarding SSEDM minimization.
In the Maxmin (Katsavounidis et al. 1994) algorithm, a
random data point is selected as the first centre. Then, the
data point with the largest distance from the previously
selected centre is considered as the ith centre. The algo-
rithm in Redmond and Heneghan (2007) divides the data
set space into several buckets via kd-trees, determining the
density of each bucket. Each bucket is represented by a
point which is the mean of points in the bucket. The bucket
with the greatest density value is selected as the first centre.
The mean point of a bucket, which has the maximum value
of multiplication of its density by the distance from its
nearest centre, is selected as the ith centre.
In K-means ?? (Arthur and Vassilvitskii 2007; Min
and Kai-fei 2015), the first centre is randomly selected
from among the data points of data set. It selects a data
2
point x 2 X as the ith centre with probability PDðxÞ 2 ,
x2X
DðxÞ
where D(x) represents the shortest distance from a data
point to the closest centre which has already been selected.
The global K-means (GKM) (Likas et al. 2003) begins
with two centres, adding a centre at each time. To add the
ith centre, each data point is considered by GKM as a
candidate for the ith centre. In this algorithm, the data point
Determination of Customer Satisfaction using Improved K-means algorithm
leading to the minimum value of bn ¼
Pn n o
j 2
j¼1 max 0; di1  xn  xj is chosen as the ith centre.
Modified GKM (MGKM) (Bagirov 2008) selects the
starting point of the ith centre in a completely different
manner through minimizing another auxiliary cluster
function. The experiments show that although the MGKM
can minimize the SSEDM more effectively than the GKM,
it is slower than the GKM. Lai et al. (Lai and Huang 2010)
intended to speed up GKM through the use of the cluster
membership and geometrical information of a data point.
The fast MGKM (FMGKM) (Bagirov et al. 2011) exploits
data collected in previous iterations of the incremental
algorithm and cuts down on memory usage while accel-
erating the MGKM.
Erisoglu et al. (2011) proposed a mechanism to reduce
computational time of selecting initial centres. Their pro-
posed mechanism tries to select two dimensions which
describe the change in the data set at first in the best way.
Thereafter, these two dimensions are used in all compu-
tations while selecting k centres to calculate the required
distances between data points. Then, the mean of data
points is determined according to the selected dimensions.
The farthest data point to the mean is selected as the first
centre. A data point with the largest sum of distances from
previous i - 1 centres is selected as the ith centre. This is
iterated until all required centres are selected.
Yu et al. (2018) proposed tri-level K-means algorithm
and bi-layer K-means algorithm. K-means algorithm is
vulnerable to outliers and noisy data and also susceptible to
initial cluster centres. Tri-level K-means algorithm can
tackle these shortcomings. While the data in a data set S are
often changed, after a while, the trained cluster centres
cannot precisely describe the data in each cluster. There-
fore, the cluster centres must be updated. When the data in
a cluster are significantly different, only a cluster centre
cannot precisely describe each datum in the cluster. Noisy
data, outliers, and the data with different values in a same
cluster may slow down the performance of a pattern
matching system. Bi-layer K-means algorithm can over-
come these problems. Moreover, a genetic-based algorithm
is provided to derive the fittest parameters used in tri-level
K-means algorithm and bi-layer K-means algorithm,
respectively.
Zhang et al. (2018) proposed multi-view clustering,
which has been of considerable interest in recent years due
to its ability to analyse data from multiple sources or views.
They proposed a novel multi-view clustering approach
termed Two-level Weighted Collaborative K-means (TW-
Co- K-means). A new objective function is designed for
multi-view clustering, exploiting the particular information
in each view while benefiting from the complementariness
and consistency of various views in a collaborative manner.
The views and the characteristics in each view are allo-
cated with weights that reflect their importance. An itera-
tive optimization method has been introduced to optimize
the objective function and, subsequently, accomplish the
ultimate clustering result.
Bai et al. (2018) employed fuzzy K-means clustering
algorithm to find arbitrarily shaped clusters. This algorithm
inherits the scalability of fuzzy K-means and tackles its
drawback concerning finding arbitrarily shaped clusters.
To obtain the initial cluster centre, Chen et al. (2018)
proposed an optimized K-means algorithm upon mean shift
clustering. This algorithm selects the initial cluster centre
in the high-density area of the data set, being more in line
with the actual distribution of the data.
Deng et al. (2018) presented a heuristic method to
address the scalability problem of K-means, supported by
an approximate k-nearest neighbours graph when the data
size and the cluster number are large.
In another work, Dong et al. (2019) suggested a new
intrusion detection algorithm DB-K-means in which the
advantages of K-means and DBSCAN are combined. Ini-
tially, DB-K-means employs the optimized DBSCAN to
remove noise points; then, it uses the optimized K-means
algorithm to divide the data into different clusters and mark
it either as normal or abnormal.
Xiaofeng and Xiaohong (2017) proposed an optimized
K-means and multi-level SVM fusion of semi-supervised
learning network intrusion detection algorithm. The algo-
rithm primarily applies the optimized K-means to divide
the data into various clusters and mark it as normal or
abnormal; then, it employs the multi-level SVM to classify
the clusters marked as abnormal in order to obtain the
ultimate goal of achieving improved detection efficiency.
Gu et al. (2019) proposed the semi-supervised K-means
algorithm using hybrid feature selection (SKM-HFS) to
detect distributed denial of service attacks. They intro-
duced an optimized method for selecting initial cluster
centres based on density in order to solve the issue of
outliers and local optimal of K-means clustering.
Hu et al. (2019) introduced an efficient multiple kernel
K-means clustering approach called Consensus Multiple
Kernel Clustering with Late Fusion Alignment and Matrix-
induced Regularization (CMKC-LFA-MR) with the aim of
considering the correlation between various clustering
partitions. Their proposed approach promotes clustering
performance.
Manxi et al. (2018) proposed an optimized K-means
algorithm through the incorporation of mutual information
into the K-means algorithm and modifying the iteration
conditions in a way as to find the community structure of
Bayesian networks. In their proposed algorithm, mutual
information is employed as a distance between nodes. The
123

non-central points in the clustering subset are randomly
selected as the new clustering central points, with the
central points being materialized. This can also cut down
on the sensitivity of the K-means algorithm to the isolated
points.
Nguyen et al. (2019) introduced a kernel-based distance
metric learning approach called KDMLSC to enhance the
practical use of K-means clustering. Obtaining an appro-
priate distance metric accurately reflecting the (dis)simi-
larity between examples is a key factor in successfulness of
K-means clustering.
Wang et al. (2019) developed two multiple kernel K-
means algorithms with late fusion. Their proposed algo-
rithms integrate the various clustering indicator matrices
instead of the optimal kernel for clustering in the former
multiple kernel framework. The clustering process and the
optimization assignment can be linked to one optimization
problem. In order to implement the proposed framework,
two novel average and adaptive approaches (average
multiple kernel K-means with late fusion (Average-
MKKMLF)) and (adaptive multiple kernel K-means with
late fusion (Adaptive-MKKM-LF)) with carefully designed
deterministic fusion optimization goals have been intro-
duced to overcome the optimization problem in multiple
kernel K-means clustering with proved convergence.
2.2 CRM improvement based on data mining
algorithm
Data mining techniques applied on CRMS include associ-
ations, classification, clustering, predictive analysis,
sequence, or visualization (Chiang 2018; Shmueli et al.
2017).
Also, numerous data mining methods have previously
been proposed (He and Song 2009; Maryani and Riana
2017; Yuliari et al. 2015) based on clustering for pro-
cessing the customer data. As an example, one can refer to
the application of data mining in customer partitioning,
behavioural modelling with the aim of predicting Customer
Life cycle Value (CLV) and providing appropriate service
to potential customers in the direction of CRM imple-
mentation, corporate customer turnaround analysis, and
forecasting and evaluating the organization’s performance
(Sohrabi and Hadavandi 2011). Kafashpour et al. (2012)
determined the values of RFM model variables, including
the exchange rate, the number of exchanges, and the
monetary value of exchange in 260 customers, and
weighted them using the hierarchical analysis process in
the East Tosh Business Company. They employed the
adapted K-means for clustering customers as the life cycle
value pyramid to identify the valuable customers of the
company.
123
H. Zare, S. Emadi
Sohrabi and Hadavandi (2011) investigated the cus-
tomer life cycle value of a private bank using K-means
clustering to classify customers. Customers’ features were
analysed by partitioning the customers into eight clusters
using the customer life cycle value and RFM (Recency,
Frequency, and Monetary) model. The disadvantages of
using this method in customer relationship management are
based on the RFM model variables to analyse their fea-
tures. According to Rinartzio Kumar, Chung and Tessa, the
RFM model is unable to identify customers with long-term/
short-term communications. In the LRFM model (length,
recency, frequency, and monetary), the length of customer
relationship has a significant impact on customer loyalty
and profitability so that increasing the length of customer
relationship will improve customer loyalty.
Wang and Zhang (2010) examined the ability of the
RFM model to classify customers in after-sales service
companies. In this research, 5821 customers were divided
into eight clusters using K-means methods and the hierar-
chical analysis process (AHP) so that customer life cycle
value was determined in each cluster. However, inappro-
priate clusters may be created as there are customers with
very little interaction with the organization but with a
significant role in customers clustering. As a result, these
types of customers, known as low-value customer groups,
should be eliminated from the data set and identified as an
outlier. Li et al. (2011) used a two-stage clustering tech-
nique to analyse the characteristics of the customers of a
knitting factory based on extended RFM model. In this
approach, the optimum number of clusters was determined
using the WARD index (Eszergár-Kiss and Caesar 2017),
and the customers were divided by K-means method into
five clusters. Since the studied company belongs to the
textile industry and the demand for this industry depends
on the seasons, more accurate results can be obtained while
using the LRFM model. This is due to the fact that the gap
between the first and last purchase in different seasons can
have a significant impact on the result and division of
customers.
Li et al. (2017) suggested a customer-based data mining
model based on a binary behavioural response and divided
the customers’ businesses into three stages as follows. The
first step is to collect samples of the feedback on marketing
activities. In the second step, the decision tree algorithm is
applied to use sample data to find out the rules of the
communications of target customers. In the third step, new
feedback data are collected by the rules and are used to
create the target customer list. The authors do not identify
noise and malicious customers in their approach; as a
result, inappropriate customer clusters may be created.
Pawar (2016) proposed a new technique for clustering and
classification of large numbers of customers so that orga-
nization can identify valuable customers. Mukhlas et al.
Determination of Customer Satisfaction using Improved K-means algorithm
(2016), in support of the local cooperative community in
customer partitioning, market analysis, and prototype
building, have investigated customers clustering based on
interactive and behavioural characteristics and have out-
lined a data mining method which is used to predict the
purchase of customer-interested products, increasing pro-
ductivity and profits for the organization. In this way, by
offering a trading business, the customer is eager on future
purchases from the organization. In this research, more
attention is paid to loyal customers and their behavioural
characteristics, and they are distinguished from other users,
and this can help to classify customers. However, they did
not notice customers with no loyalty to the organization
and did not identify these customers in their community.
The inappropriate clustering is done, and the analyses of
the clusters are not accurate. Zahrotun argues about clus-
tering process through applying Fuzzy C-means (FCM)
technique to customer’s data at tokodiapers.com online
shopping services. The proposed method in their study has
the ability of partitioning customer data on tokodiapers.-
com through the use of fuzzy C-Means clustering method
(Zahrotun 2017).
In another study conducted by Maghfirah et al., cus-
tomer segmentation has been employed to help the banks
with dividing the market into client groups according to
their needs, characteristics, or behaviours, which may
require a specific good or marketing mix (Maghfirah et al.
2015). Alsac et al. (2017) analysed the data of a company
operating in health sector in Turkey, through employing
certain data mining algorithms such as naive Bayes which
is a classification rule algorithm, J48 which is an algorithm
for generating decision tree, and k-nearest neighbour IBk
algorithm. Accordingly, customers were categorized in
terms of product groups and risk factors. The aim of their
work was to develop a marketing strategy, also to create a
more effective sales campaign for the company considering
classification outcomes.
Kumar and Reddy (2017) presented an effective method
for implementation of K-means. To do so, they firstly
computed a kd-tree for the given data set. Secondly, they
used the kd-tree to select and separate initial cluster centres
located at dense areas. Finally, the cluster centres were
updated by recursively visiting the nodes in the kd-tree and
eliminating distance computations towards cluster centres
which are not nearest to at least one point in the node.
Peker et al. proposed a RFMP model for customer seg-
mentation in the grocery retail industry. They classified
customers into five different groups by K-means algorithm,
and they are profiled based on LRFMP features. Finally,
CRM and marketing strategies are recommended to them
(Peker et al. 2017). Alvandi et al. purposed a model to
calculate Customer Lifetime Value (CLV) based on LRFM
customer relationship model. They classified the customers
in order to set marketing strategies. They used K-mean
algorithm and crisp method on real data from an Iranian
state bank. The results show nine cluster patterns between
customers to propose the customer strategies (Alvandi et al.
2012).
Anitha and Patil(2019) applied business intelligence in
identifying potential customers in the retail industry by
using K-means algorithm based on the RFM (Recency,
Frequency and Monetary) model. Finally, a variety of data
set clusters are validated based on the calculation of Sil-
houette coefficient. Khalili et al. (2018) proposed a hybrid
method based on the methods like decision tree approach,
clustering, and rule extraction to predict the new entities
for the customer centric companies and K-means for pre-
dicting future transactions based on the historical beha-
viour of the customers under various segmentations. They
used the hybrid feature selection for filtering making and
decision-making methods. Christy et al. (2018) used
unsupervised algorithms like K-means and fuzzy C–means
for the RFM analysis using transactional data set for
evaluating customers on their purchase behaviour. Carnein
and Trautmann (2019) believed that because of high
volatility of the market, customer segments change over a
period of time. They have introduced the concept of
‘Stream Clustering’ to identify the new clusters or
emerging clusters and replacing the older ones. Qadadeh
and Abdallah (2018) employed K-means and self-orga-
nizing SOM algorithms to cluster the customer features via
RFM model.
Fränti and Sieranoja (2019) studied the most important
factors that deteriorate the performance of the K-means
algorithm are cluster overlap. In case with high overlap, K-
means iterations perform satisfying irrespective of the
initialization. Also, all initialization approaches exhibit
poorer performance with increasing number of clusters. To
perform successfully, the K-means relies directly on the
number of clusters. Higher number of clusters means more
possible errors before and after the iterations. They stated
that dimensionality has no positive impact in this respect.
Although it has a slight impact on some initialization
approaches, K-means iterations are typically independent
of the dimensions.
3 Proposed method
This research has proposed a methodology to modelling
customer behaviour and extracting knowledge for customer
relationship management based on the CRISP methodol-
ogy, because CRISP methodology is flexible and can be
customized easily (Khajvand and Tarokh 2011).
As Fig. 1 shows, the proposed method is implemented
in the following two phases:
123
 H. Zare, S. Emadi

Phase1

Scaling
Extracting data: LRFMM2
Transaction Data: LRFMM2 parameters parameters
Customer data
Outlier detection and cleaning

Phase2

Evaluating clusters by SSE

Customer classification
Extracting knowledge from
Determining initial data of each cluster
clusters
Clustering
Comparison with other algorithms

Fig. 1 Structure of research methodology

• Data preparing and pre-processing
• Modelling and Evaluation
3.1 Phase 1: data preparing and pre-processing
Extracting data, scaling L, R, F, M, M2 parameters, cus-
tomer data and outlier detection, and cleaning are sub-
phases of data preparing and pre-processing phase.
Information of collected data includes customer’s ID,
number of purchased systems, price paid, purchase date,
and customer satisfaction.
In extracting data sub-phase, there are transaction data
in detail which include date of transaction, number of
purchased systems in each date, monetary value of trans-
action, and customer satisfaction. For extracting L, R, F,
M, and M2 parameters of each customer in this research,
the distance between the customer’s first and final pur-
chases was calculated as L feature. The distance between
customer’s last purchase and the end of the time period is
calculated as R feature. The number of purchased systems
between the customer’s first and last purchases is calcu-
lated as F feature. The total monetary value between the
customer’s first and last purchases over a given time period
is calculated as M feature. In this research, the malicious-
ness of customers (M2 feature) is also considered as one of
the influential parameters in CRM which is calculated from
the customers’ satisfaction in each record of the data set
and the amount of minimum and maximum of malicious-
ness of customers is determined by experts and sales
managers.
One of the most powerful and simplest models to
implement CRM may be the RFM model—Recency, Fre-
quency, and Monetary value (Kafashpour et al. 2012;
Olson 2017):
• The recent purchase indicates the duration of the last
business interaction and the current time. As long as
this period is lower, the value of R is higher.
• The frequency of purchases indicates the number of
purchases and transactions in a given range. Higher
number of repetitions indicates the greater value of F.
• The monetary value of a purchase represents the value
of money spent by a customer on interactions in a
particular time interval. Greater amount of money spent
represents the higher value of M.
In RFM model, if R, F, and M are large, the likelihood
of a new transaction with the customer and customer
repurchase is higher. The basic assumption of the model is
that future patterns of exchange and customer purchasing
are likely to be similar to those of the past and present. The
RFM model selects customers who have recently created
high financial value for the company and in the short time
have a more frequent buying frequency than the average
purchase frequency among recurring buyers as valued
customers, while the factor of the duration of communi-
cation with the company is ignored.
The results show that the length of the periods in which
an individual can be identified as a customer by the orga-
nization has a positive relationship with the periods in
which the customers wish to continue to communicate with
the organization. Hence, in the LRFM, customers are cat-
egorized based on four features, namely customer

123
Determination of Customer Satisfaction using Improved K-means algorithm
relationship length, purchasing novelty, buying frequency,
and purchasing value (Kumar et al. 2006). They found that
an increase in the duration of customer relationship will
improve customer loyalty, which defines the time interval
between the first and last customer purchases in the desired
range.
In addition to LRFM and RFM models, some customers
may be against the organization, and pessimistic for some
reason, and this pessimism can have a significant impact on
customer relationship management. This negative view can
be towards the organization or one of the members of the
organization. For this reason, this research by using a new
feature called Malicious (M2) can identify malicious cus-
tomers who are specific to this set and eliminate these
customers from their data set to determine their CLV. This
new model is called LRFMM2. According to Eq. (1),
customer satisfaction rate is between maximum and mini-
mum, which is derived from experts’ opinions and
knowledge and customer surveys.
MIN\M2 \MAX
Since the proposed method performs clustering with
high precision in a noisy environment, in outlier detection
and cleaning sub-phase, first the data whose CLV and
LRFMM2 features further away from the rest of the data
are detected and then these data are deleted. However, the
quality of the model depends on the amount determined for
this distance (Baxter et al. 2002).
According to Eq. (2), the sum of the distance of each
datum from the rest of the data is calculated:
X
k X
k
DISð xÞ ¼ j Xn  X m j
m¼1 n¼1
where x is a summation of the data distance, Xn and Xm
represent the value of nth and mth set of data, respectively,
and k is the number of data. Then, in Eq. (3), the means of
the data distance are shown.
AVEðDISð xÞÞ ¼ ðDISð xÞÞ=k
According to Eq. (3), DIS (x) is the distance of x from
the rest of the data. The average distance is a suit-
able measure for detecting outlier data; if it exceeds the
specified threshold, it is identified as outlier data and
should be removed from the data set.
In the following, the outlier data are deduced from the
data set using the two parameters Malicious (M2) and the
average of the data distance with the following two
conditions:
Condition 1 the malicious range of customer is set to
1 B M2 B 10 by an expert, and according to the experts
view and Eq. (4), a customer with a malicious range of
greater than 8 is an unacceptable customer in the data set.
Therefore, customers whose values of the normalized
parameter M2 (M20 ) are greater than 0.8 are outlier data.
0
If M2 [ 0:8 ! noise data ð4Þ
Condition 2 according to Eq. (5), customers whose mali-
cious range (M2) is greater than 5 (from the experts’ view)
and DIS (Xi) is greater than p*AVE (DIS (x)) are consid-
ered as the outlier data. The value of p = 3 is obtained
based on multiple tests in various data sets.
 0 
If M2 [ 5&ðDISðXi Þ [ ðp  AVEðDISðxÞÞÞÞ ! noise data
ð5Þ
Finally, after deleting outlier data, the customer life
cycle value (CLV) for each customer is obtained based on
the LRFMM2 features according to Eq. 6:
CLV ¼ L þ R þ F þ M þ M2 ð6Þ
ð1Þ
3.2 Phase 2: modelling
In the second phase, customers should be segmented based
on LRFMM2 and CLV features. For clustering customers,
there are different algorithms which can be used. Among
the existing clustering algorithms, one of the most com-
monly used and simplest ones is the K-means algorithm
(Danesh et al. 2011).
K-means method partitions the data set into k clusters so
that each cluster has the following two properties:
ð2Þ • Each cluster contains at least one data,
• Each datum in the data set belongs exactly to a cluster.
When clusters have different sizes and densities and
non-spherical forms, K-means is faced with certain limi-
tations. Moreover, the algorithm will encounter problems
when the data set contains noise or outlier data. In general,
ð3Þ the algorithm has the following shortcomings (Liao et al.
2012):
• The final answer depends on the selection of early
clusters,
• There is no known procedure for calculating the centres
of clusters,
• If there are zero numbers of data belonging to a cluster
in one running of the algorithm, there is no way to
modify the method,
• It is assumed that in this method the number of clusters
is determined from the beginning, while the number of
clusters is usually unknown in many applications,
• The ending of the K-means algorithm is guaranteed, but
the final result is not the same and the number of
clusters is not always optimal.
123

Determining the optional number of clusters, determin-
ing initial data of each cluster and clustering are sub-phases
of modelling phase. The proposed algorithm is presented to
find the optimal number of clusters as well as the initial
values of optimized clusters, also to eliminate noise data.
Determining the Optimal Number of Clusters
Selection of suitable cluster numbers is one of the most
important issues in clustering. The number of clusters is
suitable if:
• Samples in a cluster are as similar as possible;
• Samples belonging to different clusters are as incom-
mensurable as possible.
That is, the clusters should have the maximum possible
compression and should be as far from each other as pos-
sible (Subbalakshmi et al. 2015). For a proper clustering,
both criteria must be met, since if only the compression
criterion is held, then any data can be considered as a
cluster. In this case, the best clustering is to get the entire
data into a cluster, so that the distance between each cluster
is zero (Kanungo et al. 2002; Tzortzis and Likas 2014).
In this research, to determine the optimal number of
clusters, at points where the increase in CLV has a sig-
nificant mutation, the cluster should be broken and added
to the number of optimum clusters. To do this, the data set
is firstly sorted in ascending order by the CLV of each
datum. Then, in accordance with Eq. (7), the total Eucli-
dean distance of each datum which is smaller than the
original data with its previous data is calculated based on
the CLV.
X m
DISðXm Þ ¼ jXn  Xn1 j ð7Þ
n¼2
In the next step, according to Eq. (8), the average binary
distance of the data less than Xm is computed to determine
the mutation criterion and the number of clusters.
DISðXm Þ
AVEðXm Þ ¼ ð8Þ
m1
Based on the tests performed on the data, the condition
of the mutation detection between the data was predicted
with coefficient 3, based on the average binary distance of
the data.
However, if the number of data is increased, the distance
between the data will be smaller with respect to the nor-
malization operation; thus, the threefold condition for these
data in large sets will not result in the optimal number of
clusters. For this reason, according to Eq. (9), for every
custno record added to the set, one unit is added to p in
Eq. (5), so that the condition for establishing this equation
with a higher coefficient is obtained more satisfactorily.
The parameter custno has values between 2000 and 5000.
123
H. Zare, S. Emadi
The value selected for custno depends on the number of
records in the data set, so for large data sets, n must be
closer to 5000.
F
p¼ þ3 ð9Þ
custno
where F is the total number of data sets.
In the next step, according to Eq. (10), if the distance
between each datum and the previous data is larger than p *
AVE (Xm), then a large mutation is made at this point, in
which case the number of clusters is added by 1. This
operation will continue until the last record in the data set
and the final number of clusters (K) is equal to the number
of mutations that have occurred at this stage.
If ðDISðm; nÞ [ ðp  AVEðXm ÞÞÞ ! Great Jump PointðK þ þÞ
ð10Þ
In order to determine the number of clusters in the
proposed algorithm, the distance of each datum is calcu-
lated from the rest of the existing data and then the average
of this data distance is obtained. This value is a measure of
the separation of data that has jumped in the distance. If
according to Eq. (5) the data interval is more than (p *
average distance) from its previous data, these data are
identified as mutated data and added to the number of
clusters.
Since the number of mutations may also increase as the
number of customers increases, according to the expert
view p is recalculated according to Eq. (9). Therefore,
increasing or decreasing the number of clients will not have
much effect on the number of clusters of the algorithm.
Determining initial data of each cluster
It must be noticed that appropriate initial centres can
accelerate the convergence of the K-means. Therefore,
various initialization techniques have been suggested for
the K-means ((Ismkhan 2018; Arthur and Vassilvitskii
2007; Erisoglu et al. 2011; Celebi et al. 2013).
The global K-means (GKM) (Likas et al. 2003) starts
with two centres, to which a centre is added at every
iteration. To add the ith centre, GKM considers each data
point as a candidate for the ith centre. Modified GKM
(MGKM) (Bagirov 2008) suggests a different approach to
select the starting point of the ith centre, minimizing
another auxiliary cluster function. The experiments
described in Bagirov (2008) show that MGKM outper-
forms GKM in terms of minimizing the SSEDM (sum of
the squared Euclidean distance from the mean), although
its performance is slower. Another version is fast MGKM
(FMGKM) (Bagirov et al. 2011) which exploits the data
collected in previous iterations of the incremental algo-
rithm. Its advantages include decreasing memory usage and
acceleration of the MGKM.
Determination of Customer Satisfaction using Improved K-means algorithm
In the proposed method, the first step in the algorithm is
to determine the initial element of each cluster. This
method initially begins with a cluster containing an ele-
ment, and in other steps, it calculates the distance of the
other elements from the centre of the specified clusters.
However, the closest data to the data average are deter-
mined as the only member of the first cluster. After
assigning each element to a cluster, data average of that
cluster is updated based on CLV according to Eq. (11).
This equation is applied to each attribute of cluster centre
and new data:
datanew þ ðc  Aveold Þ
Avenew ¼ ð11Þ
sizeold þ 1
where datanew is the new input element to the cluster, aveold
is the average of the previous elements in the cluster, and
sizeold is the number of cluster elements before the entry of
the new element into the cluster.
In the following, the distance between all elements of
the data set and centre of the cluster is calculated. Then,
two elements are extracted; the first element which has the
smallest distance with the centre of the cluster is the new
member of the first cluster, and the second element which
has the greatest distance with the cluster centre is the first
element of the second cluster. The process of adding the
two elements to the clusters repeats so that each k cluster
has at least one member. Finally, the distance between the
data and the centre of clusters is calculated and the data
with the greatest average of distance from the entire centre
of cluster are determined as the first element of the new
cluster according to Eq. (12), and the data that have the
smallest distance from the centre of each cluster are con-
sidered as a member of that cluster according to Eq. (13):
P 
k  ave  1 distðx; aveÞ
b ¼ max ð12Þ
k px1
P  and last purchases is calculated as F feature. The total
k  ave  1 distðx; aveÞ
a ¼ min ð13Þ
k px1
where x is the new data, ave is the average of the data in the
clusters, k is the number of optimal clusters, and p is the
number of data remaining in the data set. The centre of each
cluster, after adding the elements to them, is updated
according to Eq. (11) to get k clusters with at least 1 member.
Then, using Eq. (14), the closest data to the centre of
each cluster are found and are added to it:
c ¼ minfdistðx; aÞgx2mðaÞ ð14Þ
where m(a) is the desired cluster number (a) in Eq. (13)
and x is an element of the data set. After all the elements of
the original data set are clustered, the average of each
cluster is also available and can be used as the centre of the
clusters in the K-means.
4 Results and discussion
The purpose of this research is to apply the proposed
method on the customers of a company to extract appro-
priate strategies to each company’s part and to use the
acquired knowledge in the organization’s knowledge
management cycle.
Two types of data sets are used in experiments. The first
data set is the customer database of Hamkaran System Co.
with 7312 records. Firstly, empty/noisy features such as the
invalidity of the date field, the purchase price, or the system
number need to be removed to ensure quality pre-pro-
cessing. Having removed empty features, 6319 customers
were still available.
The second database is the customer database of Ham-
karan System Co. with 15,000 final records.
After the feature selection process, the final version of
pre-processed data sets with the most relevant features was
obtained. The selected features involved the customer’s
name, the number of purchased systems, the purchase date,
and the purchase price, which could be used for clustering.
Below sections are the results of the evaluation on the
first data set, and in the final section, comparisons with
other algorithms are performed on both data sets.
4.1 Phase 1: Collecting and Pre-Processing
of Input Variables
The selected features should be used to determine five
features, namely L, R, F, M, and M2, for customers clus-
tering (Table 1). In this research, the distance between the
customer’s first and final purchases is calculated as L fea-
ture. The distance between customer’s last purchase and
the end of the time period is calculated as R feature. The
number of purchased systems between the customer’s first
monetary value between the customer’s first and last pur-
chases over a given time period is calculated as M feature.
The maliciousness of customers (M2 feature) is also
determined by experts and sales managers.
Table 2 shows an example of customers whose
LRFMM2 features are calculated. Since the selected fea-
tures of the samples in this study do not have the same
change intervals, to minimize the effect of different prop-
erties, Min–Max normalization was used (Han et al. 2011).
Normalization of LRFMM2 features for some data is
shown in Table 3. Finally, clustering of the customers is
performed according to these features.
In the next step, LRFMM2 features are weighted using
the grouped hierarchical method (Mojena 1977), the output
of the Expert Choice software, and based on the paired
comparison of the LRFMM2 features. By comparing the
123
 H. Zare, S. Emadi

Table 1 Introducing LRFMM2 features

Row Variable Description

1 ID Customer number
2 L The interval between the first purchase and the last customer’s purchase
3 R The interval between the last purchase of the customer by the end of the specified time period
4 F The number of customer purchases in the specified time period
5 M Customer purchases based on the financial value within the specified time period
6 M2 Customer satisfaction

pair of features, the significance coefficient of each of them The values of the LRFMM2 and CLV features are
is calculated. Therefore, the special vector is calculated shown in Table 5.
using geometric comparison and normalization of the Finally in this step, malicious customers are excluded
obtained values. from the data set to eliminate their effect on clustering.
According to the output of this software, the relative According to Eq. (3) and the conditions 1 and 2, the outlier
weights of these features were obtained according to data are detected and are deleted from the data set. The
Table 4, L (0.119), R (0.06), F (0.244), M (0.463), and M2 number of outlier customers was 16. An example of these
(0.115). results is shown in Table 6. According to this table, the
Because each of the LRFMM2 features has different data of row 4920 and 5059 are the result of condition 1 and
weights, these weights can affect the way customers are the data of row 6230 are the result of condition 2.
clustered. It is also necessary to determine the association
of the weights of each feature to the values obtained for 4.2 Phase 2: modelling
that feature for all records in the data set. This is deter-
mined by multiplying the normalized value of the feature To obtain the number of clusters in the proposed method, it
by its weight (Eq. (15)): is necessary to identify the points at which a large jump is
M200 ¼ WM2  M20 M200 ¼ WM  M20 made in the customer CLV. To find points with a large
ð15Þ
L00 ¼ WL  L0 R00 ¼ WR  R0 F 00 ¼ WF  F 0 jump, the data are first arranged in terms of the CLV in
ascending order; then, the distance of each datum from its
Finally, each customer life cycle value (CLV) is equal to previous data in ascending order CLV is obtained. The final
the total value of the LRFMM2 features based on Eq. (6): result of this step is shown in Table 7, and the average of
CLV ¼ L00 þ R00 þ F 00 þ M 00 þ M200 the distance of each datum is calculated with data smaller
than itself (Eq. 7).
Table 8 shows the distance between some data and
Table 2 LRFMM2 indices for customers’ sample centre of the first cluster. The values of optimal centres
Row Customer name L R F M M2 obtained are shown in Table 9. After that, these steps are
repeated to obtain all the cluster centres. Using Eqs. 7–10,
1 … 172 1278 7 43,079,000 1
the optimal number of clusters was calculated as 15. Also,
2 … 411 1020 3 53,206,000 4
as shown in Table 10, using classic K-means clustering and
3 … 0 223 1 23,423,000 3
the results obtained from the Dunn index, the optimal
4 … 0 1257 1 23,423,000 3
number of clusters with the highest Dunn index was
5 … 673 828 2 28,723,000 9
determined to be 15. This result shows that the proposed
6 … 385 1314 2 254,830,000 7 method has correctly identified the number of clusters, but
7 … 239 305 2 30,617,000 2 this was done in a shorter time.
8 … 88 770 2 284,230,000 1 The obtained values of the optimal centres in improved
9 … 882 692 2 31,148,000 4 K-means and centres of the clusters created randomly in
10 … 0 1595 1 234,230,000 2 classic K-means are shown in Table 9. Then, customers
11 … 91 913 8 702,700,000 2 were clustered based on the LRFMM2 features. Table 11
12 … 534 782 2 468,460,000 5 shows the number of data in each cluster in improved K-
13 … 819 824 3 248,000,000 1 means and classic K-means.
14 … 1040 769 5 305,050,000 1
15 … 158 1522 5 2,960,000 1

123
Determination of Customer Satisfaction using Improved K-means algorithm

Table 3 Normalization of
Row Customer name l normal R normal F normal M Normal M2 normal
LRFMM2 features
1 … 0.95264317 0.245200219 0.047619048 0.007114706 1
2 … 0.691629956 0.905101481 0.031746032 0.006335914 1
3 … 0.345814978 0.878771256 0.007936507 0.002381598 1
4 … 0.890969163 0.921557872 0.095238095 0.016010109 1
5 … 0.642621145 0.768513439 0.07935079 0.013666975 0.888888889
6 … 0.263215859 0.280307186 0.007936508 0.004984594 0.444444444
7 … 0.233480176 0.93527153 0.063492064 0.026344879 0.333333333
8 … 0.898127753 0.990624412 0.087301587 0.008003638 1
9 … 0.756057269 0.840921558 0.103174603 0.078547543 0.777777778
10 … 0.844162996 0.967087219 0.142857143 0.040894094 0.777777778
11 … 0.050110132 0.500276273 0.055555556 0.02600279 0.666666667
12 … 0.65969163 0.936368623 0.023809524 0.007473242 0.666666667
13 … 0.900881057 0.947888097 0.158730159 0.038175515 0.333333333
14 … 0.572687225 0.579264948 0.031746032 0.003742459 1
15 … 0 0.723406473 0 0.001119114 0.888888889

Table 4 Weight of LRFMM2 features K-means. The results of SSE are shown in Table 12. Given
the SSE values, our proposed method with the lowest SSE
L R F M M2 Weight
value is selected for extraction of knowledge.
L 1 4 3 6 3 0.119
R 0.25 1 3 5 3 0.06 4.4 Using knowledge derived from clustering
F 0.33 0.33 1 2 6 0.244
M 0.16 0.2 0.5 1 4 0.463 Having classified the customers in 15 clusters, the required
M 0.33 0.33 0.16 0.25 1 0.115 knowledge of these clusters should be extracted so that the
clusters are evaluated and analysed. Since customers in a
4.3 Evaluating clusters by sum of total squared cluster have similar behavioural characteristics, extracted
errors criteria knowledge can be a great guide to adopting optimal
strategies tailored to each cluster for better management of
Sum of squared error criterion (SSE criteria) (Feng et al. customer relationships. Table 13 shows the average value
2015) is used to compare the proposed method and classic of L.R.F.M.M2 features in each cluster based on dividing

Table 5 Values of LRFMM2

Row Customer name L (value) R (value) F (value) M (value) M2 (value) CLV
and CLV features
1 … 0.0113365 0.01471201 0.01161905 0.00329611 0.115 0.15596
2 … 0.082304 0.05430609 0.00774602 0.00293353 0.115 0.26229
3 … 0.041152 0.05272628 0.00193651 0.00110268 0.115 0.21192
4 … 0.106053 0.05529347 0.0232381 0.00741268 0.115 0.30697
5 … 0.0764719 0.04611081 0.01936508 0.00632781 0.10222222 0.2505
6 … 0.0313227 0.01681843 0.00193651 0.00230787 0.051111111 0.1035
7 … 0.0277841 0.05611629 0.01549206 0.01219768 0.03833333 0.16992
8 … 0.1068772 0.05944048 0.02130159 0.00370568 0.115 0.30632
9 … 0.0899708 0.05045529 0.0251746 0.03636751 0.08944444 0.29161
10 … 0.1004554 0.05802523 0.03485714 0.01893397 0.08944444 0.30172
11 … 0.0059631 0.03001646 0.01355556 0.01203929 0.07666667 0.13824
12 … 0.0785033 0.05618212 0.00580952 0.00346011 0.07666667 0.22062
13 … 0.1072048 0.05687329 0.02783016 0.01767526 0.03833333 0.25882
14 … 0.0681498 0.0367559 0.00774603 0.00173276 0.115 0.22738
15 … 0 0.04400439 0 0.00051815 0.10222222 0.14674

123
 H. Zare, S. Emadi

Table 6 Outlier data identification Also, customer life cycle value is calculated in each
Row Customer name Distance from other data M
cluster, and the customers are classified in the customer
value pyramid in Fig. 2. As shown in this figure, the
118 … 333.134728 1 clusters with higher CLV are located at upper levels of this
226 … 770.337678 1 pyramid. Also, the linear graph of the customer life cycle
244 … 519.0062648 1 value is shown in Fig. 3.
4920 … 2154.631055 6
1109 … 706.3420992 2 4.5 Analysis of clustering results
4574 … 351.6237346 6
5214 … 322.6735643 7 The purpose of this research is to classify the customers of
5059 … 1630.689118 7 Hamkaran System Co. based on their CLV using the
1941 … 938.6377863 3 LRFMM2 features and the improved K-means method.
6230 … 459.2522449 9 Also, the analysis of clusters in order to more accurately
3159 … 310.050627 4 assess the features of customers and the final partitioning of
… … … … customers in the form of CLV pyramid are some of the
… … … … special cases used in this study to satisfy the customers.
… … … … Customers in all clusters other than clusters from the first to
the fifth in this pyramid are in a favourable position in
Average distance between data: 446.2476034
terms of L, R, F, M, M2 features. Therefore, to maintain
these customers, the company is recommended to trans-
Table 7 Distance of any data from previous data form loyalty behaviour of these customers to loyalty view
Row Customer name CLV through establishing communication and interaction with
them.
1 … 0.262223628
Accordingly, customers in clusters 7 to 15 have the best
2 … 0.0268523932 conditions in terms of L, R, F, M, M features. Customers in
… … … cluster 6 are in favourable conditions in terms of recent
… … … purchasing, malicious and purchasing time. However, these
… … … customers are not in a good position in terms of a number
4206 … 0.1578784479 of purchases and purchasing amounts and the company
4207 … 0.1578898727 should invest on them to order new systems. Cluster 5
4208 … 0.1579069536 customers are considered to be missing customers, and the
4209 … 0.1581086040 company must pay special attention to the sale of new
4210 … 0.1581521162 products to them. Cluster 4 customers are customers who
4211 … 0.1581575984 are dissatisfied with the system and have had long-term
4212 … 0.1581942404 purchases. That is, these customers have not had double-
… … … sided interactions with the company in a long time, and
… … … therefore, they have reduced their satisfaction with the
company. As a result, the cost of purchasing this customer
group is also reduced. Customers in clusters 1, 2, and 3 are
the total value of the features in each cluster into the lost customers, and investments made on them by the
number of customers in that cluster. company will not be successful and beneficial. As a result,
Table 14 shows the comparison between the average these customers are regarded as lost customers as they are
values of the L, R, F, M, M features in each cluster and the very unhappy with the company and have not had an
average values of these features for all data. acceptable purchase over the time frame, which does not
As shown, the sign (:) (desirable state) is used when the help too much financially.
average value of each feature in a cluster is greater than the
average value of that feature in the total data, and the sign 4.6 Comparison of the proposed algorithm
(;) (undesirable condition) is used where the average value with other algorithms
of the feature in a cluster is less than the average value in
the total data. The last column of Table 14 shows the The proposed algorithm was compared with DBSCAN
average ranking of the feature s in each cluster in com- clustering, hierarchical clustering and IK-means-? (
parison with other clusters. Ismkhan 2018) algorithms.

123
Determination of Customer Satisfaction using Improved K-means algorithm

Table 8 Distance from the first cluster centre

Row Customer name CLV First cluster centre First cluster

1 … 0.2287927 0.1461945673 0.825981328

2 … 0.16829495 0.1461945673 0.0221003827
3 … 0.1560914671 0.1461945673 0.0098958998
… … … … …
766 … 0.1462017052 0.1461945673 0.0000071379 Least distance
The second element of the cluster 1
… … … … …
5913 … 0.8987083171 0.1461945673 0.7525137498 Maximum distance
New cluster 2 element
… … … … …
6320 … 0.1039865355 0.1461945673 0.0422080318
6321 … 0.0020737094 0.1461945672 0.1441208579
6322 … 0.0015783931 0.1461945673 0.1446161842

Table 9 Value of optimal cluster centres

Row Cluster CLV of cluster centres in improved K-means CLV of cluster centres in classic K-means

1 Cluster 1 0.8987083171 0.5691094129

2 Cluster 2 0.7598177169 0.3215912223
3 Cluster 3 0.6192538932 0.8987083171
4 Cluster 4 0.5761698729 0.3638519496
5 Cluster 5 0.5691094129 0.8987083171
6 Cluster 6 0.4696476840 0.4204430338
7 Cluster 7 0.3638203636 0.4950704583
8 Cluster 8 0.1526541136 0.0564768887
9 Cluster 9 0.0646915269 0.5761698729
10 Cluster 10 0.0417882488 0.2961741289
11 Cluster 11 0.0323226943 0.3239657403
12 Cluster 12 0.0285419652 0.2711738810
13 Cluster 13 0.0269086453 0.1644750508
14 Cluster 14 0.0268523932 0.1689292279
15 Cluster 15 0.0262223628 0.2615105404

The number of data in the first data set is 6319 records
and in the second data set is 15,000 records. Number of
clusters, SSE, and clustering time parameters were selected
for comparison.
DBSCAN clustering method is one of the density-based
clustering algorithms. The main concept of this algorithm
is to locate regions of high density that are separated from
one another by regions of low density. The key idea is that
for each point of a cluster, the neighbourhood of a given
radius has to contain at least a minimum number of points.
DBSCAN requires two parameters: e (eps) and the mini-
mum number of points required to form a dense region
(minPts). eps defines the neighbourhood around a data
point, i.e. if the distance between two points is lower or
equal to ‘eps’, then they are considered as neighbours. If
the eps value is chosen too small, then a large part of the
data will be considered as outliers. If it is chosen very
large, then the clusters will merge and majority of the data
points will be in the same clusters. MinPts is minimum
number of neighbours (data points) within eps radius. The
larger the data set, the larger value of MinPts must be
chosen. As a general rule, the minimum MinPts can be
derived from the number of dimensions D in the data set as

123
 H. Zare, S. Emadi

Table 10 Dunn indicator values for specified clusters in classic K- MinPts C D ? 1. The minimum value of MinPts must be
means chosen at least 3 (Schubert et al. 2017).
Number of clusters Dan index In data mining and statistics, hierarchical clustering
(also called hierarchical cluster analysis or HCA) is a
10 0.0003594385
method of cluster analysis which seeks to build a hierarchy
11 0.0002493929 of clusters. Strategies for hierarchical clustering generally
12 0.0003208687 fall into two types (Szekely and Rizzo 2005):
13 0.0002494322
14 0.0004841421 • Agglomerative This is a ‘bottom-up’ approach: each
15 0.0005287482 observation starts in its own cluster, and pairs of
16 0.0005285562 clusters are merged as one moves up the hierarchy.
17 0.0003212698 • Divisive This is a ‘top-down’ approach: all observations
18 0.0001647504
start in one cluster, and splits are performed recursively
19 0.0005278998
as one moves down the hierarchy.
20 0.0003211122 Calculating the similarity between two clusters is
important to merge or divide the clusters. Then, we use
single linkage (the shortest distance between two points),
complete linkage (the longest distance between two points
Table 11 Number of cluster customers in each cluster), mean or average linkage (the average
distance between each point in one cluster to every point in
Cluster Number of customers per cluster Number of customers
number in improved K-means per cluster in K-means the other cluster), centroid distance and ward’s method
(sum of squared Euclidean distance is minimized).
1 287 1026 Table 15 shows the comparison between these algo-
2 579 1 rithms and the proposed algorithm on the first data set. In
3 780 12 this evaluation, the parameter value P = 2000 is selected
4 874 852 and for the DBSCAN algorithm, two values are selected for
5 1019 1188 required parameters based on repeated experiments. Also,
6 752 1 several methods have been used to determine the similarity
7 608 2 between clusters in the hierarchical algorithm. On the other
8 444 655 hand, because the number of clusters should be given as
9 424 39 inputs in the IK-means-? , in this evaluation the number
10 341 521 of clusters 15 was selected. As Table 15 shows, the
11 161 1 DBSCAN algorithm and IK-means-? are better than the
12 32 898 proposed algorithm in time, but worse than the SSE
13 3 369 parameter. Since the criterion for clustering suitability is
14 1 535 the SSE parameter, the proposed algorithm works well for
15 1 205 small data sets.
Tables 16 and 17 show the comparison between these
algorithms and the proposed algorithm on the second data
set. In this evaluation, the values P = 4000 and p = 5000 is
selected. The rest of the specifications are similar to the
first evaluation. In these tables as in Table 15, the
Table 12 The SSE values in the proposed algorithm and standard K-
means DBSCAN algorithm and IK-means-? algorithm are better
than the proposed algorithm in time, but worse than the
Clustering methods SSE
SSE parameter. Since the criterion for clustering suitability
Proposed K-means 0.3908527624 is the SSE parameter, the proposed algorithm works well
Classic K-means with random cluster centres 1 0.4834075448 for large data sets.
Classic K-means with random cluster centres 2 0.4156998956 In both data sets, the hierarchical algorithm performs
Classic K-means with random cluster centres 3 0.6040612737 worse than the other algorithms.
Classic K-means with random cluster centres 4 0.4834075448

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Determination of Customer Satisfaction using Improved K-means algorithm

Table 13 Average value of L, R, F, M, M2 features per cluster

Cluster Average feature Average feature Average feature Average feature Average feature Average feature value
value L value R value F value M value M2 CLV

1 0.0004717148 0.0089718865 0.0016396217 0.0008347777 0.0365969803 0.048514981

2 0.0012409697 0.0178519721 0.0029030896 0.0018665711 0.0500076761 0.073870289
3 0.0020568430 0.0224960125 0.0027930403 0.0019332268 0.064527778 0.0938069
4 0.0037594242 0.0270518207 0.0038818786 0.0027465332 0.0745760234 0.1121568
5 0.0053918041 0.0329044157 0.0043006059 0.0032322383 0.0838643550 0.129693419
6 0.0116369095 0.0407779729 0.0062781999 0.0045680594 0.0868277187 0.15008886
7 0.0223731787 0.0457105480 0.0088767231 0.0066546835 0.0890451389 0.172660272
8 0.0448456426 0.0478043320 0.0125044330 0.0096441649 0.0837462462 0.198544819
9 0.0682416438 0.0498514256 0.0157438553 0.0115905780 0.0832821119 0.228709615
10 0.0871776810 0.0538265854 0.0191379230 0.0136647278 0.0903812317 0.264188149
11 0.0916562440 0.0552327574 0.0374792468 0.0309624533 0.0914285714 0.306759273
12 0.0927353042 0.0546701865 0.0785496032 0.0896930320 0.0970312500 0.412679376
13 0.0975284508 0.0518705431 0.1213544973 0.2322390499 0.0851851852 0.588177726
14 0.0798794053 0.0596708722 0.0774603175 0.4533626775 0.0894444444 0.759817717
15 0.0170374449 0.0596708722 0.2440000000 0.4630000000 0.1150000000 0.898708317

Table 14 Clusters tagging based on LRFMM2 features a particular feature called maliciousness. Moreover, the
Cluster Average value Average rating
proposed method calculates the optimal number of clusters.
of LRFMM2 features of LRFMM2 features Therefore, the proposed method is more accurate and faster
than the classic K-means clustering as there is no need to
1 ##### 15.15.15.15.15 guess the number of clusters by the user and to compare it
2 ##### 14.14.13.14.14 with the number of predicted clusters in the previous steps.
3 ##### 13.13.14.13.13 The knowledge gained from the results of the proposed
4 "#### 12.12.12.12.12 method can easily be employed by company managers to
5 "###" 11.11.11.11.9 adopt an appropriate strategy for attracting and maintaining
6 ""##" 10.10.10.10.7 customers and improving its financial performance.
7 """"" 8.9.9.9.6 Future researchers are suggested to consider the wide
8 """"" 7.8.8.8.10 application of data mining methods in software industry,
9 """"" 6.7.7.7.11 the application of the proposed method in other fields such
10 """"" 4.5.6.6.4 as customer credibility assessment and prediction of cus-
11 """"" 3.3.5.5.3 tomer’s ability to buy from the company, and evaluation of
12 """"" 2.4.3.4.2 the company’s performance. It is also suggested that the
13 """"" 1.6.2.3.8 maliciousness level of customers should be determined
14 """"" 5.2.4.2.5 using data mining methods such as association rules and
15 """"" 9.1.1.1.1 the rules extraction. On the other hand, intermittent time
slices from the company database allow the dynamic
implementation of data mining based on the LRFMM2
5 Conclusion
model to determine the CLV, which reflects the process of
changes in customer behaviour, plays a significant role in
In this paper, an improved K-means method was proposed
marketing actions, and improves CRM.
based on malicious customers. Therefore, the results of
clustering have been improved through the consideration of

123
 H. Zare, S. Emadi

Fig. 2 Customer value pyramid

Fig. 3 Linear life cycle value

123
Determination of Customer Satisfaction using Improved K-means algorithm

Table 15 Comparison between

Number of clusters SSE Time (ms)
the proposed algorithm and
other algorithms on the first data IK-means-? 15 3.2 10,125
set
DBSCAN minpt = 10, eps = 0.001 17 2.76 221
minpt = 6, eps = 0.001 16 4.59 219
Hierarchical Average 38 5.35 52,059
Complete 49 5.2 52,473
Single 40 5.27 54,623
Ward 52 5.6 44,904
Centroid 50 5.57 46,459
Proposed algorithm 15 0.39 11,512

Table 16 Comparison between

Number of clusters SSE Time (ms)
the proposed algorithm and
other algorithms on the second IK-means-? 15 5.41 90,129
data set and p = 4000
DBSCAN minpt = 10, eps = 0.001 1 6.49 2201
minpt = 6, eps = 0.001 4 6.49 2229
Hierarchical Average 35 6.87 513,300
Complete 36 6.54 513,270
Single 35 5.98 514,270
Ward 35 5.35 500,711
Centroid 40 6.23 535,031
Proposed algorithm 5 0.39 22,108

Table 17 Comparison between

Number of clusters SSE Time (ms)
the proposed algorithm and
other algorithms on the second IK-means-? 15 5.41 93,230
data set and p = 5000
DBSCAN minpt = 10, eps = 0.001 1 6.49 2321
minpt = 6, eps = 0.001 4 6.49 2429
Hierarchical Average 35 6.31 513,300
Complete 36 6.27 513,270
Single 35 5.78 514,270
Ward 35 4.85 500,711
Centroid 40 5.57 535,031
Proposed algorithm 15 0.072 105,406

Compliance with ethical standards
Conflict of interest The authors declare that there is no conflict of
interest regarding the publication of this paper.
Human and animal rights This article does not contain any studies
with human participants or animals performed by the authors.
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