Cluster analysis — what it is and how to get started

Cluster analysis definition

What is cluster analysis?

Cluster analysis is a statistical method used to identify and group similar data points together while also highlighting differences between groups.

The purpose of cluster analysis in marketing is to segment consumers into distinct groups with similar characteristics, allowing businesses to understand their target audience better and tailor their marketing strategies accordingly.

There are five main clustering approaches, but the most common are k-means and hierarchical clustering. The clustering approach an organization takes depends on what is being analyzed and why.

Understanding cluster analysis

Cluster analysis is at the forefront of data analysis. It’s no wonder why industries like finance, insurance, retail and ecommerce, and marketing find it useful to identify patterns and relationships within their data.

Among the different analysis methods, k-means clustering is the most widely used and provides a simple but effective approach to partitioning data into groups. With visualization techniques such as scatter plots and dendrograms, businesses can effortlessly showcase their cluster analysis results in a clear and understandable way.

Understanding cluster analysis

With customer segmentation at the heart of modern marketing, cluster analysis has become an essential tool for dividing customers into distinct groups based on shared characteristics. This allows businesses to create buyer personas that personalize marketing and ecommerce efforts and drive engagement and conversion.

Getting started with cluster analysis

The main benefit of cluster analysis is that it allows businesses to uncover patterns and relationships within their data, enabling them to make informed decisions and take action based on real-time insights.

If you’re ready to get started with cluster analysis, the first step is to find a proven software tool that can help you analyze and interpret your data effectively.

Adobe Analytics turns real-time data into real-time insights. As more than a web analytics solution, it takes data from any point in the customer journey and turns it into an insight that guides your next best action. Backed by Adobe Sensei, Analytics uses artificial intelligence (AI) to deliver predictive insights based on the full scope of your data, allowing users to view and manipulate data in real time.

Request a demo or watch the overview video to learn more about Adobe Analytics.