Value-Based Segmentation and the Use of CHAID

Abstract

The process of measuring and evaluating results can also be used to develop an overall segmentation strategy. The most commonly used approach in developing a segmentation strategy is based on value. The key and ultimately the largest challenge in this type of exercise is the identification of metrics and measures that comprise value. Once these measures and metrics are identified, a value result is built for each customer record. The results of this exercise are presented in the decile report shown in figure 18.1.