Define the Profitability Segments
Appendix 2 compares highly profitable customers with other customers in the report on JetSpray's top market segment, while Appendix 6 shows how to append proxy variables to the data in an Excel worksheet. Appendix 4 specifies the keystrokes for defining the profitability segments with the following steps:
- Define purchases as the proxy for volume of items, and calculate each respondent's purchases.
- Define the loyalty index as the proxy for potential profit per item, and determine each respondent's score on the loyalty index.
- Define the profitability index as the proxy for potential profit from customers, and multiply purchases by the loyalty index to determine each respondent's score on the profitability ...