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The Big Break: Identifying Patterns in Your Customer Portfolio

Part 1 in the Series: The 8-Ball of Customer Portfolio Segmentation for Finance

As any pool shark will tell you, emerging victorious in a game of billiards means understanding the angles, envisioning the possibilities and staying one shot ahead. Succeeding in business is no different.

Winning a match against the competition in your growth efforts takes a mix of strategic thinking, mastery of the landscape and excellent timing. With so much at stake – cash flow, profit margins, customer satisfaction, retention and investor relationships – it’s no wonder that navigating risk effectively and identifying opportunities can make you feel like you’re sweating in a smoky billiard room with all eyes focused on your next move.

Customer Segmentation Definition

There are endless ways to mix and match data points, but finding and aligning on a customer segmentation strategy that positively correlates with purchase behavior and drives top-line growth is the result of a strong command of enterprise data, a dash of math and a sprinkle of art. It’s a powerful potion that Finance should not only contribute to, but co-create.

There are endless ways to mix and match data points, but finding and aligning on a customer segmentation strategy that positively correlates with purchase behavior and drives top-line growth is the result of a strong command of enterprise data, a dash of math and a sprinkle of art. It’s a powerful potion that Finance should not only contribute to, but co-create.
Abigail Lutte, Dun & Bradstreet

How Finance Contributes to Customer Segmentation

What does customer segmentation have to do with enterprise finance? Returning to your pool table, take a look inside the rack. All the balls seem neatly grouped together. The balls are like your customer data; for now, the chaos of the data is artificially contained in the rack, and it looks orderly. Think: CRM, ERP, back-office system. But your data probably isn’t orderly. Not if you really look at it. Solids and stripes are mixed, in no particular order and – if you’ve gotten an especially raw deal – the paint on the balls may be old and chipped. No game has been won, or even started, and no strategy has been invigorated. Your data may be quietly hidden in some sleepily contained system, possibly aging, waiting to be segmented effectively and wielded in a winning game. In order to win, you have to break into your data and start taking shots. Finance arguably owns more insight than any other group. You have a deep, familial intimacy with corporate controls, systems and technology, budgets, customer behavior, resource requirements, processes and organizational goals – not to mention data. All eyes are on you – and it’s up to you to take your cue and play like a pro.


Your first move is the data break. The balls will scatter, and your job is to pick stripes or solids and to get the balls into the appropriate pockets. Your customer data will likely be disordered and overwhelming once you take the plunge, leaving you and your colleagues with powerful decisions to make. In order to win, your moves have to be carefully thought out and impeccably timed, and each ball’s trajectory must be observed in relation to the others. It’s every billiard champion’s ultimate goal to walk away with balls purposefully tucked into pockets, and it’s your goal – in fact, the entire enterprise’s goal – to create, implement and drive your strategic growth and manage your enterprise risk in a way that helps your company win. Superb customer segmentation is the pool shark business leader's strategy to get there.

3 Benefits of Customer Segmentation

First, a look at the game itself. What are the primary benefits of effective customer portfolio segmentation for Finance – and for your company at large? Finance has the power to drive increased cash flow, collaboration and profitable growth with analytics. Deloitte highlights the emerging benefits of this approach to segmentation for Finance. "The time is now for finance leaders to help influence, and in some cases to outright own, the business analytics to help drive top and bottom-line growth."

Increased Cash Flow

Having all the balls on the table in the beginning of the game complicates the moves you can make and therefore increases the force needed to pocket the ball. Mounds of uncategorized, unclean and unmanaged customer data will present similar obstacles to increasing your cash flow. Segmented appropriately, your clean customer data will command unique treatments and targeting strategies for each customer group, ultimately leading to increased cash flow. Are your customers in B2C retail on the slow-pay track? Dedicate resources to keep an eye on them or create an automated industry alert profile for use in the sales process before extending credit terms to reduce DSO. Do you find that you have the lowest market penetration in Canada, but that Canadian customers are the least likely to default? That’s another opportunity to drink a cosmo with your Marketing colleagues and steer your ship toward increased free cash flow.

Increased Collaboration between Finance, Marketing & Sales

Successful segmentation isn’t performed in a vacuum – and it’s much more than slicing a key lime pie into pieces. Segmentation allows you and your organization to define and align on the key attributes that unite people with your enterprise mission. Performing segmentation and strategizing on it in a Finance silo, perhaps as a well-meaning exercise in departmental efficiency, will result in a structural misalignment at best – and a poor customer experience at worst. Have you ever made an executive decision to dedicate more time, technology or people to a group of accounts that you later discovered were not being marketed to or managed effectively because they were not deemed a priority? You will likely find the root of the problem is that other groups in your organization had different segmentation strategies – and likely their own data sources and visualization techniques as well! In the end, collaboration isn’t just a benefit for companies financially; it’s a benefit for customers. When you’ve successfully defined the messaging, resource constraints, treatment and service package as a management unit that commands the greatest value from and for your customers, you’ve succeeded as business leaders.

Profitable Insights from Honest Customer Portfolios

Profitable growth is the byproduct of effective strategy, and what strategy can be effective without galvanizing the opportunities within your current landscape? Segmentation is more than visualizing patterns in your customer database; it’s also about action and forward movement. There should be a twinkle in your eye on the day that you can visualize your opportunity areas so clearly that your next moves are practically spelled out for you in brightly-colored neon lights. You see that your least profitable customers are taking up 80% of the time of your collection agents and 50% of the time of your customer service staff, and that you have 300 sales account managers dedicated to them to manage their influx of complaints and requests. Yet, they comprise approximately 2% of your total customer base and incur negative returns. If you have that kind of fluid, cross-functional insight at your disposal, how much more profitable and productive can your meetings, your strategy, your people and your own time become? Follow the neon lights!

Customer Portfolio Segmentation Do’s & Don’ts

Like a game of pool between professionals, creating and following a superior segmentation strategy is an iterative process. In our next installment, we’ll go over the customer portfolio segmentation don’ts, the dos and how to report on your success.

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