The measurement of profitability at the individual customer level is the key to profitable customer relationship management. The real value of a customer comes from the actual value plus the net present value of all future profit from that customer. When we perform the Customer Value Measurement we have to take into consideration the potential value of the current customer that can come from the potential services that the provider can assure to him beyond the actual product used. Therefore the providers can rank their customers in terms of current year profitability and long-term value.
Through these measurements we are able to define several customer segments by value, and organize marketing campaigns or special customer treatment to regain these costumers, or achieve the unrealised potentials.
It’s important to identify the less profitable customer segment also, to avoid the costly retention programs for that segment.
Usually we recommend the definition of three base customer value segments:
● the most valuable customer segment (MVC),
● the most dynamic customer segment (MDC) and
● the non-profitable customer segment (NPC).