Which Customers Can You Do Without?

“Customer Segmentation” was something I learned about the hard way.  With 200-some customers at my company, it became apparent that we were spending as much time servicing the smallest ones as the largest.  Too much time!

Then my wizened mentor asked me a simple but profound question:  “Is your worst customer even profitable?”

Huh?  Aren’t all customers profitable?  Turns out, sadly, NO!

Over the next few hours we wrangled a list of all customers into a simple “Segmentation” that ranked all of our customers by the amount they spent with us during the prior year.

After we split the group into 5ths — quintiles — it became a lot easier to make each customer more profitable by managing each group differently.   From operations to marketing to Christmas cards, each quintile got different treatment… and our profits soared.

If you’d like to learn more about this — how to do it and which parts of your operation to change — please read the whole story here.

Dedicated to your (Segmented) profits,

David