A Framework for Statistically-Sound Customer Segment Search

Abstract

We develop S4, a Statistically-Sound Segment Search framework that combines principled data partitioning and sound statistical testing to verify common hypotheses in retail data and return interpretable customer data segments. Our framework accommodates one-sample, two-sample, and multiple-sample testing, to provide various aggregations and comparisons of customer transactions. To control the proportion of false discoveries in multiple hypothesis testing, we enforce an FDR-controlling procedure and formulate a unified optimization problem that returns customer data segments that satisfy the test for a given significance level, maximize coverage of the input data, and are within a risk capital. We develop a greedy algorithm to explore different data partitions and test multiple hypotheses in a sound manner. Our extensive experiments on four retail data sets examine the interaction between significance, risk and coverage, and demonstrate the expressivity, usefulness, and scalability of S4 in practice.