Many MBA students will have come across the Boston Consulting Group Growth-Share Matrix and will have marvelled at the elegance and insight the model brings to planning and business strategy. It’s a simple approach and may seem somewhat dated in these days of big data.
At easycom, we have taken the BCG matrix and tweaked it slightly to apply it to a retailer’s set of customers. Our approach is to segment the customers by profitability and to add a further category of gold mine:
We’ve also renamed the dog category to puppy, as we’re polite!
Our snapshot segmentation is based on a historical shopping analysis of customers considering their lifetime profitability and recency of data combined together with a number of other special factors to give this categorisation. Customers move up and down the categorisation with time and activity.
We believe this is a game changing view of customers that can be used across a retailer’s business to drive profitable activities and engagement and to identify the most value customers to look after. Moreover, our model tells retailers where NOT to invest and to reduce activities or engagement where customers are yielding little or negative profits. As with the original BCG matrix, the simplicity belies the value of the model, but sometimes simple is best.