Consumer pyramid model

The discussions above are about definitions of customer loyalty. For a better implementation of a customer loyalty strategy, understanding the customer is also important. In the following part, the methods of customer classification will be introduced. Because customer classification can better help companies visualize, analyze, and improve the behavior and profitability of customers (Curry, 2000). According to Torres-Moraga and partners’ article (Torres-Moraga et al., 2008); customer can be classified into three categories. The first is recent customers. They adopt the product that best fits their needs or best appeals to them emotionally and cognitively. The second is more experienced but not highly experience customers. They adopt a range of brands based on both value and price. The last is some highly experienced customers. They become loyal to a brand. (Torres-Moraga et al., 2008) Moreover, in Curry’s (2000) book, they mention that customer can be classified into five categories. (As showed in the following Basic Customer Pyramid) As mentioned in Curry’s (2000) book, there are varieties of customer classifying methods that have been introduced during the past decades. Based on the research of these customer classifying methods, a basic customer pyramid is introduced (See appendix 2).

· The first part is active customers. It means persons or companies that have purchased goods or services from the company within a given period.

· The second part is inactive customer. It means persons or companies that have purchased goods or services from the company in the past but not within the given period.

· The third part is prospects customer. It means persons or companies with whom there is some kind of relationship-but they have not yet purchased any goods or service.

· The fourth part is suspects. It means persons or companies that you could be able to serve with products and services, but you do not yet have a relationship with them.

· The last part is the rest of the world. It means persons or companies that simply have no need or desire to purchase or use your products and services. (Curry, 2000)

As mentioned above, according to Curry (2000), customer is classified to five categories. In these five parts, the active customer is more important. Therefore, Curry (2000) further classifies it to four parts in the following Standard Customer Pyramid. (See appendix 3)

· The first part is defined as the “Top” customer. It refers to the top 1% of the active customers.

· The second part is defined as the “Big” customer. It means the next 4% of the active customers.

· The third part is defined as the “Medium” customer. It refers to the next 15% of the active customers.

· The last part is defined as the “Small” customer. It means the remaining 80% of the active customers.

The author’s classifying base is customer behavior critical, for example the sales avenue. The classifying makes the pyramid to be more helpful in understanding and analyzing customer behavior (Curry, 2000).