Segment I: Segment I can be regarded as unattractive. It has low potential value and low current value. Therefore, it is expected that future profitability is low. In order to maximize the profitability of this segment, strategies should focus on cost reductions and possibly on price increases (i.e. less promotions) instead of trying to increase the purchase level.
Segment II: Segment II has high potential value, but the company has not succeeded in taking a large share of this value. Therefore, companies should aim to get a larger part of the customer potential in this segment. Customers in this segment have many opportunities for upselling activities. Of course, some customers might be more sensitive to such activities than others.
Segment III: Segment III has low potential value and high current value. We are concerned here with relatively loyal customers with low up-selling possibilities. As loyal customers are important for companies, companies should strive to keep these customers. However, up-selling efforts are not likely to be successful.
Segment IV: This segment is the most valuable segment. These customers are loyal and have a large potential value. Losing this group of customers would really harm the company. Management should strive to keep this group of customers using all kinds of relational efforts. This group might, for example, get priority in the service delivery process.
1 comment:
I'm wondering if the HR folks can start using this concept on their employees too. :) [replace 'customers' in the table with 'employees']
Buddy, we should apply analytics on human behaviour and start writing on them...(will fetch us some $$$ too).
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