It’s one thing to have customers that are loyal like the spa customer is expected to...

It’s one thing to have customers that are loyal like the spa customer is expected to be. It’s another thing to develop loyal AND profitable customers. Both customer attributes are essential if you are to run a successful firm.

Assume you have four products and three customers. You can see that both products and customers range from highly profitable to unprofitable. When you know which customers are most profitable and what they buy, you can segment them according to profitability to the firm. What implications does this have for the amount of service provided?

Expert Solution

The customers should be segmented into profitable, prospective profitable and unprofitable.

The amount of service should be beyond excellent for profitable customers. These are the bunch of people who are loyal to the company, its products, and their services and must be treated with great respect for their trust in the company.
The prospective profitable customers are those customers who are not yet loyal to the brand but with exceptional services provided might turn into loyal and profitable customers. Therefore, they should be treated carefully and the opportunity to serve them must be used to turn them into profitable customers.
Lastly, the unprofitable customers are those which aren't loyal, profitable, either now or in the future, and are in fact bad for the company due to their behavior. Such customers should not be given any extraordinary treatment but should be dealt with regular courtesy and utmost civility. This means the sales people involved with dealing with such customers won't have to suffer at the hands of such customers.

keosha answered 2 years ago

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