Segmentation is the procedure of grouping together a set of customers based on certain similar features. These customers grouped together are known to have similar behavior and hence, the future behavior of accounts within a segment can be predicted to follow the similar behavioral patterns as observed for other accounts. Thus, by predicting the behavior of an account, it can be segmented with a set of similar accounts and its future projections can be created. These future projections provide the value of net income that can be expected from an account or customer.
Segmentation is done based on a certain set of dimensions wherein accounts which exhibit a particular combination of dimension members are grouped together. Based on the characteristic around which segmentation is to be created, the dimensions used for segmentation can vary.
This chapter covers the following topics: