Introduction
Not every customer provides the same value. While some customers return regularly and are loyal, others contribute only minimally. By segment customer value, an organization can use its resources more effectively, strengthen customer relationships and increase profits.
In this article, we discuss what customer value is, how to measure it, how to segment customers and how to apply strategies by segment.
What is customer value?
Customer lifetime value (CLV) is the total revenue generated by a customer throughout the relationship with your business. It's not just about sales, it's about:
- Loyalty
- Cross-sell and upsell potential
- Positive word-of-mouth advertising
Why segmentation is important
By segmenting customer value:
- Focus on customers who contribute the most to profits.
- Tailor your marketing and service to the needs of each segment.
- Discover your growth opportunities and improve your ROI.
Steps to segment customer value
1. Collect data
Gather information such as:
- Purchase History
- Frequency of purchases
- Average order value
- Customer behavior and interaction with service
2. Calculate customer value
CLV can be easily calculated via:
CLV=(Average order value×Number of purchases per year)×Average customer durationinyears
3. Segment customers
Frequently used segments:
- High Value / High Loyalty: most profitable, promoters
- High Value / Low Loyalty: great potential but risk of churn
- Low Value / High Loyalty: loyal but limited financial returns
- Low Value / Low Loyalty: little strategic value
4. Analyze behavior by segment
View by segment:
- What products or services are purchased?
- What communication channels are effective?
- What complaints or feedback are common?
Strategies by segment
High Value / High Loyalty
- Reward with exclusive offers
- Engage in beta testing and co-creation
- Ambassador programs
High Value / Low Loyalty
- Proactive account management
- Personal follow-ups
- Incentives to increase loyalty
Low Value / High Loyalty
- Automating communication and service
- Cost-effective retention programs
Low Value / Low Loyalty
- Minimize investments
- Focus on conversion and upsell opportunities
Practical examples
- Retail: A web shop analyzed customer value and found that 20% of customers were responsible for 60% of sales. This group received extra service and offers, which increased sales by 15%.
- B2B: A software company adapted account management based on CLV. High-value customers received dedicated managers, low-value customers self-service and digital guidance.
- Banks: Through segmentation, high-value customers received personalized offers and low-value customers received automated communications.
Tools and metrics
- CRM systems (Salesforce, HubSpot)
- BI tools (Power BI, Tableau)
- Metrics: CLV, churn rate, NPS by segment, CES
Challenges
- Data quality: inaccurate data leads to wrong segmentation.
- Changing customer value: CLV may fluctuate over time.
- Balance between cost and revenue: invest smartly in segments with high strategic value.
Conclusion
Customer value segmentation makes marketing and service more effective and strategic. By focusing on the right customers and tailoring actions by segment, you increase loyalty, revenue and efficiency.
The result: a company that optimizes its resources and maximizes both customer satisfaction and profits.
