3 min readfrom Data Science

So how do we all feel about KMeans algorithm for clustering?

Our take

In exploring the KMeans algorithm for clustering customer data, I've analyzed a dataset of $73 million in orders from 380,000 customers. By classifying customers into three distinct groups, I found meaningful insights that align with both automated clustering and my manual classifications. I’m eager to discuss the practical implications of clustering methods, particularly regarding inertia and silhouette scores. How do you interpret these metrics, and what strategies do you employ when selecting the number of clusters?
So how do we all feel about KMeans algorithm for clustering?

In the realm of data science, the discussion around clustering algorithms, particularly KMeans, is both rich and nuanced. A recent exploration of customer order data, amounting to $73 million across 380,000 customers, highlights the practical application and effectiveness of KMeans clustering. The user's findings reveal that three distinct customer groups emerged, aligning with both intuitive understanding and a manual classification approach. This case not only showcases the power of KMeans but also opens up a vital conversation on the selection and interpretation of clustering methods in practice, inviting further inquiry into the balance of technical rigor and domain knowledge.

The first key takeaway from this analysis is the importance of domain knowledge when selecting the number of clusters (k). The user's choice of three clusters stemmed from a combination of inertia and silhouette scores, as well as an intuitive grasp of the customer landscape. This mirrors insights from other discussions on clustering techniques, such as in If you've ever wondered how rigorous data analysis+social science research can look with AI, I've finally launched a nice website for my open-source Claude Code researcher's toolkit: the Data Analyst Augmentation Framework! Equal parts interactive explainer on agentic orchestration + free tool where the emphasis is also placed on the intersection of statistical methods and real-world application. The user’s findings resonate with many data practitioners who grapple with the same challenge: how do we derive meaningful insights from complex datasets while ensuring that our methods remain interpretable and actionable?

Another interesting aspect raised is the comparative value of inertia versus silhouette scores. While inertia provides a measure of how tightly grouped the clusters are, the silhouette score assesses how well each data point fits within its cluster in relation to other clusters. The user’s experience points to a common pitfall: relying solely on these scores without fully considering their context can be misleading. As they noted, the absolute values are less important than the relationships between them. Herein lies a crucial lesson for data scientists: effective clustering is as much about understanding the underlying data as it is about applying algorithms. This aligns with the sentiment expressed in other discussions within the community, such as those found in [Aiki my local Wikipedia Retrieval-Augmented Generation system [R]](/post/aiki-my-local-wikipedia-retrieval-augmented-generation-syste-cmplve3uf0jhds0glm7l53s4i), emphasizing the need for a balance between technical insight and practical application.

Looking ahead, the conversation around clustering methods is likely to evolve as data becomes more complex and multidimensional. As practitioners delve deeper into machine learning and artificial intelligence, the question arises: how do we choose the right method for our specific challenges? This inquiry is not merely academic; it directly impacts business strategies and decision-making processes. The balance between leveraging advanced algorithms like KMeans and ensuring that results are interpretable and actionable is central to maximizing the value derived from data.

Ultimately, the exploration of KMeans in this context serves as a reminder of the broader significance of clustering in data analysis. It underscores the necessity for ongoing dialogue among data scientists, encouraging them to share insights and best practices. As we collectively navigate the complexities of data interpretation, the quest for clarity and understanding in clustering will remain an essential pursuit. How we answer these questions will shape the future of data-driven decision-making and innovation in various sectors.

So how do we all feel about KMeans algorithm for clustering?

Hi there,

At work I was recently given a dataset of customer orders totaling around $73m of spend across 380,000 customers. I wanted to see what I can learn by applying the KMeans algorithm to the dataset of customers, to see how it would classify customers. I got the results, they make sense, but I wanted to start a discussion here to see how everybody thinks about clustering methods in practice.

Context:

I decided to go with three groups of customers. The charts for inertia and silhouette scores are attached (I tested k from 2 to 11). I selected 3 because of 2 main reasons:

  1. middle ground between what the inertia and silhouette scores are telling me. After k=4, inertia starts to decrease at a slower rate, and silhouette sore is highest at k=2.

  2. intuitively, three groups of customers make sense for us.

Overall, the three clusters that were identified represented:

  1. 50% of customers that place only a couple of smaller orders

  2. 25% of customers with very high LTV, due to many/frequent orders

  3. 25% of customers with very high AOV (they purchase a specific product type).

Attached image shows differences between groups.

What I'm thinking about:

  1. Does using KMeans even make sense in this case? The results matched pretty well with a manual classification I did separately (high-value, frequent customers / small amount of orders, low value customers, and the rest). Is it better to use a classification that you can understand / has a clear interpretation, instead of using clusters?

  2. How do you interpret inertia / silhouette scores? From what I understand, the absolute values themselves do not matter, it's the relationship between different number of clusters. In this case, the silhouette chart is a bit misleading (y-axis actually shows a very small range, I just wanted to zoom in a little bit). From what I understand, domain knowledge is key when selecting k, but wanted to see if there are some other "tricks" here to search for. Which one to prioritize between inertia and silhouette?

  3. I used KMeans because it seemed like a reasonable starting point, I had little intuition about the geometry of data points in the space, to assume another clustering methods would be better. So how do you decide between clustering methods?

Did clustering methods help you solve a problem in production? I'm interested in hearing your thoughts about clustering methods in general.

Inertia and silhouette charts

Averages of spend, # orders, AOV between three groups

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