Tuesday, October 03, 2006

Customer Capacity and Headroom

How much can a customer consume?

Recent article I wrote on using capacity as a means of targeting can be found on Chief Marketer.

The main point: Customers have value to the firm as well as an overall capacity to consume. The difference between the two, e.g. headroom, makes Life Time Value a two-sided question. How much do I satisfy their needs? How large is their total need? This can be summarized in the following matrix:

Based on the value and headroom, different segments emerge - each with their own strategy.

Even 'high-value' customers can be segmented into those who are sated and those with lots more room.

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