Customer Segmentation and Retention Strategy Based on Customer Value

Corporate′s success depends on an organization′s ability to build and maintain loyal and valued customer relationships. Therefore, it is essential to build refined strategies for customers based on their value. The first step of implementing customer retention strategies is to segment customer according to their profit contributions. This paper reviews the former research on defining and calculating customer value, suggests a new customer lifetime value model for analyzing customer value which covered the former shortages, and proposes a three-dimensional framework for segmenting customers based on their value. At last, the paper analyzes specific marketing strategy according to each segment′s character.