Customer-centric strategies consider the segmentation of customers based on their current value to the organization, but it doesn’t stop there. The future or potential value of the customer must be considered. Your current customer mix may not be as profitable as you would like. Your best customers today may not be your best customers tomorrow. Each segment should be addressed in a way that maximizes the long-term revenue and profit potential of the entire customer base.
A long-term segmentation strategy addresses the unique needs of each segment in order to increase the value of customers to the organization. This is accomplished by increasing your organization’s value to customers. It is reciprocal—it is a relationship where each party gets something of value at the end of the day and feels good about it.
To increase overall value of the customer base, one must make decisions about which segments can become more valuable, which segments need to be grown, and which segments should be avoided. Remember, it is not realistic to expect that the value of every customer can be increased. We are not magicians. The objective is to increase the value of the overall customer base.
One approach is to consider the profitability and market share of different segments of your customers. Assume you are using age to define your segments. Segment 1 represents Baby Boomers. Segment 2 represents Teens. Segment 3 represents Gen X (see Figure 6.2).