A Novel Approach to Customer Classification Based on Reliability

Customer retention is an important target for the firm´s strategic of customer relationship management in condition of the escalated market competition. The customer classification is the foundation of customer retention policies. So far, the management literature covering the customer classification has almost exhibited a quite general way based on the lifetime-profitability (revenue). But the research results indicate that a substantial positive correlation would not exist between the lifetime and the profitability (revenue). This article takes a different perspective and advances a new classification measure based on the Customer Relationship Reliability, and describes in detail how to use this measure to classify the firm´s customers, and also proposes some suitable approaches for managing the customers in different segmentation. The validity of the new classification model has been proved by a successful application in a Chinese supermarket, JUHAO