David M. Boden of Deloitte Consulting who handles the consumer business sector in the Asian and African regions, says that only about 20 percent of customers generate 80 percent of the economic value or profitability in an organization. On the other hand, up to 10 percent of customers have a direct negative impact on the bottom line. Boden who talked to Business Friday during a retail conference in Singapore, says the trick is to identify these customers that affect the bottom line through market segmentation. Segmenting a customer base is essential in balancing customer expectations versus economic value. How will the Internet and the advent of exchanges, marketplaces, etc.
Market segmentation is part of the total strategy based on enhancing relationships with customers.
At no other time in retail history have customers felt that they are really kings. Customers have started to exercise more power because of the limitless choices in the real and virtual worlds, thus, putting pressure on the retail companies to get them to continue buying something from their stores. Boden says new customer expectations and accelerating customer power have forced retail companies to change the way they view their customers. Companies, he says, that retain an old view of their customers found themselves with less loyal customers. These customers left them for other companies that can offer them more than what they paid for.