The Customer Pyramid Identifying and Selecting Target Segments Good Relationship Which segment sees high value in User characteristics costs less to maintain, and spreads itive word-of-mouth geographic location User behavio Iron company in time, effort and i when, where, how services used money, yet does not provide the quantity /value of purchase m the company want? Which frequency of use Lead segment is difficult to do business with? sensitivity to marketing variables Poor relationsh Customers Building Appropriate Customer Portfolio Forming Strong Customer Bonds Target customers whose needs match firms capabilities dd financial Focus on value of prospective customers within each segment, not just numbers benefits Avoid targeting customers who might abuse other customers Add social Add structural Create a mix of segments to reduce risks of benefits ties volatility during swings of economic cycles33 The Customer Pyramid Lead Iron Gold Which segment sees high value in the company’s offer, spends more with the companies over time, costs less to maintain, and spreads positive word-of-mouth? Which segment costs the company in time, effort and money, yet does not provide the return the company want? Which segment is difficult to do business with? Platinum Good Relationship Customers Poor Relationship Customers 34 Identifying and Selecting Target Segments User characteristics ¾ demographics ¾ psychographics ¾ geographic location ¾ benefits sought User behavior ¾ when, where, how services used ¾ quantity/value of purchases ¾ frequency of use ¾ profitability of relationship ¾ sensitivity to marketing variables 35 Building Appropriate Customer Portfolio • Target customers whose needs match firm’s capabilities • Focus on value of prospective customers within each segment, not just numbers • Avoid targeting customers who might abuse: – Your employees, facilities – other customers • Create a mix of segments to reduce risks of volatility during swings of economic cycles 36 Forming Strong Customer Bonds Add financial benefits Add social benefits Add structural ties