A practical yet meaningful approach to customer segmentation

Abstract

This paper introduces the concept of the Customer Value Matrix, a customer segmentation approach that is especially well‐suited for small retail and service businesses. The discussion offers insights into the reasons for the development of this practical approach, a concrete methodology for its implementation, and strategic and tactical applications of the concept. The material is supported with strong evidence from “real‐world” examples featuring a variety of small retail and service businesses. The paper concludes with a discussion of the managerial implications for companies that manage chains of small retail or service businesses as to how they can take advantage of local relationship marketing.