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Goal

This post provides sales managers ability to run simple Basket Analysis insights on their own without having to request support from Data Analyst. Our goal is to offer practical, easy-to-implement strategies that help you drive performance and achieve measurable results.

Key Idea

Basket analysis using Association Rule, involves understanding purchase patterns over time to see how products relate to each other within a customer’s buying journey. In this approach, each customer is viewed as a “basket,” meaning we analyze product relationships based on all items they’ve bought, across different orders. The purpose is to find patterns in what customers purchase together, over time, rather than in a single transaction.

Key metrics, like support, confidence, and lift, are used to understand these product relationships:

  • Support: The percentage of total customers who bought both items. It gives a sense of the prevalence of a combination in the overall population.
  • Confidence: The likelihood that a customer who bought one product also bought another.
  • Lift: The strength of the association between two products. A lift greater than 1 implies a meaningful association that could predict future purchases.

For example, if “Computers” and “Cell phones” frequently appear in a customer’s purchase history, the analysis could reveal that customers who buy “Cell phones” have a high likelihood of also purchasing “Computers,” helping companies understand customer preferences and potentially guiding personalized marketing strategies.

Additional interests?

So, because the purpose of this article is to give sales manager a tool that they can just plug in with their own data to generate some reports, i am just going to focus on that. if you are interested in knowing more about this topic, feel free to move to another article of mine.

Basket Analysis for Data analyst

Template: Plug in your own data

There are detailed instructions in the file. I’ve tested with some of proprietary data I have access to, it worked. but in case yours throw errors, feel free to pin me an email with screenshot and I shall come back as soon as i can.

File Attachment: Basket analysis - Basic.xlsx