How do I classify my customers / clients? An interesting question that always arises in discussions of segmenting our client base. Whether it is types of customers, or good and bad ones, there is always a problem of drawing that "fine line". We usually know that we have clients who pay more than others, and we know that we should therefore treat them differently, but "how do we draw the line?" could become a tricky question. I prefer getting the answer from the clients collectively. I would like an approach that fits to my special case, and can be used over and over without having rigid lines differentiating between "good" and "bad" clients.
This is a simple technique where you just plot your clients on a graph, draw a line, and that's it!
First create a list of all your clients, and next to each one the average purchases they make, and rank them from the highest to the lowest.
Then, plot the results on a graph, and you will end up with a "long tail". Draw a line to separate the head and the tail, and you get a fairly good segmentation between good and bad customers.
The important thing about this technique is that it is flexible and scalable to any business, and to any number of clients. It can also be used for any time range. Also, you get rid of rigid classifications (a good customer is someone who buys more than $1,000/month). This way of classifying could become ridiculous in six months, since your business can grow and your clients' purchases also.
This classifications doesn't look at amounts, it looks at the relative positioning of your clients according to their performance with your business.