Executive Briefings

Time to See Which Customers Are Worth the Trouble

The concept has been around for some time, but it has acquired a fresh urgency in today's climate. By pinpointing your profitable customers and looking for more ways to serve them, you may be able to coax new life into the bottom line.
Once those favored customers are defined and divided into homogeneous groups, CFOs will be expected to track their value like any other asset on the balance sheet. By overlaying certain metrics--such as buying needs, cost to serve, and strategic value--management can gain insight into exactly which group of users it should be courting and keeping. It might aim its promotions toward upper-middle-class women, for instance, or younger married males with a fondness for fancy gadgets. It won't be going after everybody anymore; value-crushing customers, who just buy what's on sale, won't get any special attention at all. "In a time of limited resources, management has a desperate need to figure out its priorities," says Larry Selden. "Now is the time to segment your customers."
Source: CFO

The concept has been around for some time, but it has acquired a fresh urgency in today's climate. By pinpointing your profitable customers and looking for more ways to serve them, you may be able to coax new life into the bottom line.
Once those favored customers are defined and divided into homogeneous groups, CFOs will be expected to track their value like any other asset on the balance sheet. By overlaying certain metrics--such as buying needs, cost to serve, and strategic value--management can gain insight into exactly which group of users it should be courting and keeping. It might aim its promotions toward upper-middle-class women, for instance, or younger married males with a fondness for fancy gadgets. It won't be going after everybody anymore; value-crushing customers, who just buy what's on sale, won't get any special attention at all. "In a time of limited resources, management has a desperate need to figure out its priorities," says Larry Selden. "Now is the time to segment your customers."
Source: CFO