Curry’s customer pyramid
Curry’s customer pyramid is a strategic marketing model that enables organizations to distinguish and segment customers based on their revenue. The model is based on the Pareto effect (80/20 rule), where 20% of customers account for 80% of revenue. The pyramid typically consists of seven categories, from top customers to suspects. The most valuable customers, generating the highest revenue, are positioned at the top of the pyramid. Through this model, effective customer analysis and segmentation are possible, providing insights into which customer types are most and least profitable.
When should you use Curry’s customer pyramid ?
The use of Curry’s customer pyramid can be beneficial in various situations, especially when an organization needs a structured approach to segment customers and apply targeted marketing strategies.
Why use Curry’s customer pyramid ?
Utilizing Curry’s customer pyramid can offer several advantages for an organization. Here are some reasons why you might choose to apply this model:
- Customer segmentation: Curry’s customer pyramid provides a structured method to segment customers based on their value to the organization. This enables a deeper understanding of the diversity within the customer base, identifying different groups.
- Efficient resource allocation: By classifying customers based on their value, an organization can allocate its marketing and sales resources more efficiently. It allows prioritization of the most valuable customers, directing efforts to segments that yield the highest return.
- Targeted marketing strategies: The model aids in developing specific marketing and sales strategies for each customer segment. This enables businesses to tailor product offerings and promotional activities to the unique needs and characteristics of each customer group.
- Customer retention: Insight gained from Curry’s customer pyramid can help identify customer groups likely to be loyal. This facilitates targeted customer retention programs to retain and satisfy valuable customers.
- Optimization of product and service offerings: Understanding which customer segments are most valuable allows an organization to tailor its products and services to the needs and preferences of these specific groups, increasing the likelihood of successful product launches.
- Maximization of revenue and profit: The model, based on the Pareto principle, implies that a significant portion of revenue is generated by a small percentage of customers. By focusing on these key customers, an organization can attempt to maximize revenue and profit.
In essence, Curry’s customer pyramid provides a strategic framework to help organizations understand, manage, and optimize their customer base, ultimately leading to improved performance.
How does Curry’s customer pyramid work ?
Curry’s customer pyramid is based on the Pareto principle, also known as the 80/20 rule. The Pareto principle suggests that approximately 80% of revenue is generated by about 20% of customers. This principle forms the basis for segmenting customers into different categories based on their value to the organization. Here are the steps involved in using Curry’s customer pyramid:
- Identification of customer value: The process begins by analyzing customer data to determine the value of each customer. This could be based on the revenue they generate, purchase frequency, loyalty, and other relevant criteria.
- Classification into segments: Once customer values are determined, customers are classified into different segments or categories within the customer pyramid. Curry’s model typically includes seven categories, ranging from the most valuable customers at the top to the least valuable at the bottom.
- Top Customers: 1% of customers.
- Large Customers: 4% of customers.
- Medium Customers: 15% of customers.
- Small Customers: Occasionally make purchases.
- Inactive Customers: Purchased several times in the past but no longer active.
- Prospects: Leads about which something is known, and possibly had previous interactions.
- Suspects: Leads that seem to fit the profile of a potential customer, but about which nothing else is known.
- Adjustment of Strategies: For each segment, businesses can then develop customized marketing and sales strategies. This may involve using specific offers, promotions, or communication channels to enhance customer engagement in each segment.
- Monitoring and Adjustment: It’s crucial to regularly update the customer pyramid based on new data and changing market conditions. This allows the organization to adjust strategies and continue responding to the evolving needs of different customer segments.
The ultimate goal of Curry’s customer pyramid is to help businesses effectively utilize their resources by delivering targeted efforts to customer segments that provide the most value.
Example of Curry’s customer pyramid
Below is an example of Curry’s customer pyramid. In this example, Curry’s customer pyramid is briefly discussed for an organization selling computers and related products.
- Top customers:
- 1% of customers generating the highest revenue.
- Example: Large technology companies regularly purchasing substantial quantities of computers and peripherals for their employees.
- Large Customers:
- 4% of customers representing significant value.
- Example: Medium-sized businesses buying a number of computers and IT-related equipment for their operations.
- Medium Customers:
- 15% of customers representing average value.
- Example: Small businesses acquiring a few computers to support their office activities.
- Small Customers:
- Customers making occasional purchases but not consistently generating value.
- Example: Individual consumers occasionally buying a computer or accessories when they need an upgrade or replacement.
- Inactive Customers:
- Customers who have made several purchases in the past but are no longer active.
- Example: Customers who previously bought computers but are no longer actively renewing their equipment.
- Prospects:
- Leads about which something is known, and possibly had previous interactions.
- Example: Businesses that have requested quotes in the past or participated in webinars on the latest computer technology.
- Suspects:
- Leads that seem to fit the profile of a potential customer, but about which nothing else is known.
- Example: New leads showing interest in computers based on their online search behavior, but whose specific needs have yet to be identified.
This example illustrates how companies can structure their customer pyramid based on the value and activity of different customer segments. The goal is to apply targeted strategies to each segment to optimize overall business performance.
