Strategic Framework for Customer Profitability Segmentation PPT

This PPT slide, part of the 109-slide Market Entry Strategy Toolkit PowerPoint presentation, outlines a structured approach to customer targeting and value assessment, emphasizing profitability as a core principle. It is divided into 3 main sections: dividing customers into profitability buckets, collecting data, and combining variables to determine segments.

The first section focuses on categorizing customers based on profitability metrics. It suggests determining an appropriate metric and intuitively dividing customers into groups. This could involve iterating on the categories based on observed distributions. An example provided is the segmentation of customers into the top and bottom 10% based on their yearly profitability, which highlights the importance of identifying high-value customers.

In the second section, the emphasis shifts to data collection. Here, the slide recommends creating a list of key behaviors that drive profitability. Developing segmentation hypotheses is crucial, with examples including the frequency and duration of customer use. This data collection phase is vital for understanding customer interactions and identifying patterns that can inform strategic decisions.

The final section discusses the combination of variables to form distinct customer segments. It suggests grouping customers based on their responses to key variables and conducting a "reality check" to ensure the distribution between categories makes sense. Examples illustrate this point, such as distinguishing between customers who use a product frequently, but for short durations versus those who use it less often, but for longer periods. This nuanced understanding of customer behavior can lead to more targeted strategies and improved profitability outcomes.

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