Customer Segmentation (A-F)
Understanding the six segments that define your customer portfolio.
The Six Segments#
Margin Levers divides your customer portfolio into six segments based on their profit contribution. Each segment has distinct characteristics and requires different strategic approaches.
Segment Breakdown#
A Top 1% - Highest Profit
Your most valuable customers. These represent the top 1% of your portfolio by gross profit contribution.
Strategic Priority: Protect and deepen these relationships at all costs.
B Next 4% - High Value
Strong contributors that form your profitable foundation. Often easier to expand than segment A.
Strategic Priority: Identify expansion opportunities and prevent churn.
C Next 15% - Above Average
Solid customers with potential for growth. Good candidates for upselling initiatives.
Strategic Priority: Invest in growth programs to move them toward B segment.
D Next 30% - Average
Break-even customers that cover their costs but don't contribute significant profit.
Strategic Priority: Increase efficiency or pricing to improve margins.
E Next 30% - Below Average
Marginally unprofitable customers that consume more resources than they contribute.
Strategic Priority: Restructure relationships or implement pricing adjustments.
F Bottom 20% - The Tail
Significantly unprofitable customers that are destroying value. These require immediate attention.
Strategic Priority: Rapid decision: reprice, restructure, or exit.
Key Metrics by Segment#
| Segment | % of Customers | Typical GP% | Action Urgency | |---------|----------------|-------------|----------------| | A | 1% | 60-80% | Protect | | B | 4% | 45-60% | Grow | | C | 15% | 30-45% | Nurture | | D | 30% | 15-30% | Optimize | | E | 30% | 0-15% | Restructure | | F | 20% | Negative | Decide |
Next Steps#
- View your segment analysis to see your breakdown
- Learn about tail strategies for handling unprofitable customers
- Explore head protection tactics for your best customers