PPT7 The Customer Pyramid.pdfVIP

The Customer Pyramid: Creating and Serving Profitable Customers 1 2 The Customer Pyramid  The Platinum Tier  describes the company’s most profitable customers,  typically those who are heavy users of the product, not overly price sensitive, willing to invest in and try new offerings, and are committed to the firm.  The Gold Tier  differs from the Platinum Tier in that profitability levels are not as high, perhaps because the customers want price discounts that limit margins.  They might not be as loyal to the firm even though they are heavy users in the product category – they might minimize risk by working with multiple vendors rather than just the focal company. 3 The Customer Pyramid (Cont’d)  The Iron Tier  contains customers that provide the volume needed to utilize the firm’s capacity  but whose spending levels, loyalty, and profitability are not substantial enough for special treatment.  The Lead Tier  consists of customers that are costing the company money.  They demand more attention than they are due given their spending and profitability, and  they are sometimes problem customers – complaining about the firm to others and tying up the firm’s resources. 4 Tiering Customers in the Retail Real Estate industry  the amount of time it takes to buy/sell a home (which represents the opportunity cost of time and other commissions to the realtor);  marketing costs (brochures, open houses, advertisements);  customer motivation to purchase/sell (especially high with relocations);  price sensitivity of buyers, which may lead them to negotiate a lower rate with the realtor;  likelihood of repurchase; and  referral potential.