Customer Segmentation - Data Mining Techniques in CRM: Inside Customer Segmentation - page 196

Figure 5.1 Combining value and churn propensity scores in value-at-risk segmentation.
when value segments are cross-examined with churn probability segments we
have value-at-risk segmentation, a compound segmentation which can help in
prioritizing the churn prevention campaign according to each customer's value and
risk of defection. An example of this segmentation is shown in Figure 5.1. Nine
compound segments are created after combining the three low-, medium-, and
high-value segments with the three low-, medium-, and high-risk segments.
The first segment is themost critical one since it contains high-value customers
at risk of defection. For this segment retention is the first priority.
LOYALTY SEGMENTATION
Loyalty segmentation is used to identify different groupings of customers according
to their loyalty status and to separate loyals frommigrators/switchers. The segments
are created by the application of simple business rules and/or cluster models on
survey or database information. By examining the loyalty segments an organization
can gain insight into its strengths and weaknesses. A more elaborate loyalty
segmentation is depicted in Figure 5.2 where loyals and migrators are further
segmented according to the main reason for loyalty or migration.