The Customer Pyramid is used to segment and analyze customers in a customer portfolio. The company can adjust its strategy policy by means of the results of this pyramid. In this article I explain which variables there are and how you can apply them for your organizational policy.
Do I need the Customer Pyramid?
If you have been able to acquire many customers in a short time and do not have a program to segment customers based on turnover, this pyramid can be very useful for you. You can analyze existing and new customers, so you can determine which ‘player’ is profitable and improve profitability per player.
Which variables do I need?
The players of the Customer Pyramid consist of customers. The players below indicate percentages of a healthy company:
- Top customers are 1% of your customer base with a turnover of 50%
- Major customers are 4% of the customer base with about 30% of sales
- Medium-sized customers are 15% of the customer base with 20% turnover.
The players below are spread over the remaining 80% of Curry’s Customer Pyramid:
- Small customers;
- Inactive customers, they have bought in the past, but are no longer buying;
- Prospects are players who have requested a quote but have not done anything with it;
- Suspects, are players in the market who have ever heard from the company and find the company interesting.
How can I apply the pyramid?
This is an example of a pyramid in which you should work. You indicate the turnover of your organization. Then you define the customers by definition. You distinguish between top to inactive customers. So these are four players in the pyramid. In most cases, small customers determine the largest turnover (80%), while top customers (20%) should. If a top customer disappears, you lose 20% of your turnover according to the Customer Pyramid.
What can I get out of it?
With the Customer Pyramid you try to attract a different kind of customer. In addition, you try to get customers in a higher customer segment and you make a decision which customers you absolutely want to keep. The Curry customer pyramid also shows that a strategy based on the pyramid can be based. As a result, marketing budgets can be used more targeted per customer segment, so you don’t spend too much money per customer segment. This theory can be converted into a visual model.