Customer Segmentation
The Value Through customer segmentation, companies tank the value and profitability of
multiple segments in order to harvest cost savings. This is accomplished when service levels are tailored to the value of each segment. Through segment-specific inventory management, working capital can be improved. Even SG&A can experience reduction by better focusing sales and support activities. Typically, companies that practice segmentation are able to better manage delivery to
customers While defining reliable service levels to each segment.
Customer segmentation can also be effectively used as a growrh strategy. Once
armed with behavioral information, organizations can adjust their product
strategy to better service high-potential segments while improving market share and profitability.
The Process Segmenting customers based on volume, profitability, strategic importance or
even the cost of maintaining them allows an organization to develop and better manage service levels and costs. Once segments are defined, an appropriate strategy for managing customers in each segment should be developed. Contrary to popular belief, high-volume customers, although business critical, don’t always justify high service levels when the profitability is low. Assuming that service should be volume based can often lead to higher costs without a
significant return.
Customer SegmentationThe Value Through customer segmentation, companies tank the value and profitability ofmultiple segments in order to harvest cost savings. This is accomplished when service levels are tailored to the value of each segment. Through segment-specific inventory management, working capital can be improved. Even SG&A can experience reduction by better focusing sales and support activities. Typically, companies that practice segmentation are able to better manage delivery tocustomers While defining reliable service levels to each segment.Customer segmentation can also be effectively used as a growrh strategy. Oncearmed with behavioral information, organizations can adjust their productstrategy to better service high-potential segments while improving market share and profitability.The Process Segmenting customers based on volume, profitability, strategic importance oreven the cost of maintaining them allows an organization to develop and better manage service levels and costs. Once segments are defined, an appropriate strategy for managing customers in each segment should be developed. Contrary to popular belief, high-volume customers, although business critical, don’t always justify high service levels when the profitability is low. Assuming that service should be volume based can often lead to higher costs without asignificant return.
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