Using Segmentation in Customer Retention

Segmentation is commonly used by organizations to improve their customer retention programs and help ensure that they are:
Focused on retaining their most profitable customers
Employing those tactics most likely to retain these customers
The basic approach to retention-based segmentation is that a company tags each of its active customers with 3 values:
Tag #1: Is this customer at high risk of canceling the company's service? (Or becoming a non-user)One of the most common indicators of high-risk customers is a drop off in usage of the company's service. For example, in the credit card industry this could be signaled through a customer's decline in spending on his card.
Tag #2: Is this customer worth retaining?This determination boils down to whether the post-retention profit generated from the customer is predicted to be greater than the cost incurred to retain the customer.[1]
Tag #3: What retention tactics should be used to retain this customer?For customers who are deemed “save-worthy”, it’s essential for the company to know which save tactics are most likely to be successful. Tactics commonly used range from providing “special” customer discounts to sending customers communications that reinforce the value proposition of the given service.