Overview

The ABCD Segmentation feature enables users to classify and analyze customers in four distinct groups—A, B, C, and D—based on either Sales or Margin dollar amounts. This segmentation provides insights into customer value and profitability across different Profit Max Platform application sections.

Segmentation Criteria

• Group A: Customers contributing to the top 75% (default value) of total Sales or Margin.

• Group B: Customers contributing to the next 15% (default value) of total Sales or Margin.

• Group C: Remaining customers with positive Margin.

• Group D: Customers contributing to a negative Margin.

Configurations

• Segmentation calculations can be configured to be based on either Sales or Margin.

• The percentage thresholds for Group A (75%) and Group B (15%) are configurable.

Integration Points

The ABCD column is integrated into the Customer and Document-related grids throughout the PMP application. This feature is available for sorting and provides an additional layer of data analysis.

Additional Notes

• Margin-based ABCD calculations adhere to configurable cost settings, ensuring alignment with organizational financial strategies.

Available ABCD Segment Metrics

ACBD Screens

ABCD Segmentation Widget

ABCD Segmentation Screen

Segment Detail Screen

Accessing ABCD Segmentation Settings

To configure your ABCD Segmentation settings:

1. Navigate to Settingsin Profit Max Platform

2. Select ABCD Segmentation from the settings navigation

3. The ABCD Segmentation Settings page will display

Configuring Your Segmentation

Segmentation Mode

Choose the metric that determines how customers are segmented:

• Sales $: Segments customers based on their total sales contribution

• Margin $: Segments customers based on their total margin contribution

Default: Sales $

Customer Segment Thresholds

Use the interactive sliders to define the percentile thresholds for each customer segment. These settings determine what percentage of your total sales or margin each segment represents.

Customer Segment A

"A" customers contribute the most to your bottom line.

• Default: Top 75% of total sales or margin

• Range: Adjustable in increments of 5%

• Description: These are your most valuable customers who drive the majority of your business

Example: If set to 75%, Group A includes all customers whose combined sales/margin equals the top 75% of your total business.

Customer Segment B

"B" customers contribute the second-highest amount to your bottom line.

• Default: Next 15% of total sales or margin

• Range: 5% minimum, adjustable in increments of 5%

• Description: These are important customers who represent your second tier of value

Note: Segment B represents the percentage of business after Segment A. The Segment B slider will automatically adjust based on your Segment A setting to ensure segments don't overlap.

Customer Segment C

"C" customers are the remaining customers with positive margin.

• Calculation: Automatically calculated based on Segments A and B

• Description: These customers contribute smaller but positive amounts to your business

• Formula: C = 100% - (A + B)

Example: If Segment A is 75% and Segment B is 15%, then Segment C automatically equals 10%.

Customer Segment D

"D" customers contribute negative margin.

• Calculation: Automatically determined

• Description: These are unprofitable customers who cost you money

• Note: Segment D is independent of the A, B, and C thresholds and always includes customers with negative margin

Using the Sliders

The ABCD Segmentation Settings page features intuitive slider controls that make it easy to adjust your thresholds:

How the Sliders Work:

1. Segment A Slider: Drag to adjust the percentage of top customers in Segment A

   • Moving the slider right increases Segment A and decreases the room for Segments B and C

   • Moving the slider left decreases Segment A and increases room for Segments B and C

2. Segment B Slider: Drag to adjust the percentage for Segment B

   • The maximum value automatically adjusts based on your Segment A setting

   • Minimum value is 5%

3. Segment C: Automatically calculated and displayed (no slider needed)

Slider Constraints:

• All values adjust in increments of 5%

• Segment A + Segment B + Segment C must equal 100%

• Segment B has a minimum value of 5%

• The sliders enforce these rules automatically

Visual Representation

The settings page includes a visual bar chart that shows how your customer base is divided across segments:

• Segment A: Displayed in the first section of the bar

• Segment B: Displayed in the middle section

• Segment C: Displayed in the remaining section

• Segment D: Shown separately (as it represents negative margin customers)

This visualization updates in real-time as you adjust the sliders, helping you understand the impact of your configuration changes.

Saving Your Settings

To Apply Changes:

1. Adjust the sliders to your desired thresholds

2. Review the visual representation to confirm your segmentation

3. Click Save to apply your new settings

Important Notes:

• Changes take effect on the next data sync

• All ABCD Segmentation reports and dashboards will reflect the new thresholds after sync

• You can cancel changes before saving by clicking Cancel or navigating away from the page

Discard Changes Warning:

If you attempt to navigate away from the settings page after making changes without saving, you'll be prompted with a "Discard Changes" modal to confirm whether you want to lose your unsaved changes.

Best Practices

Recommended Starting Points:

• Segment A: 75% (default) - Captures your core customer base

• Segment B: 15% (default) - Identifies your next tier of valuable customers

• Segment C: 10% (calculated) - Represents smaller but positive contributors

When to Adjust Settings:

Consider adjusting your ABCD thresholds when:

• Your business model changes (e.g., moving from volume to margin focus)

• You want to focus on a smaller group of top customers (increase Segment A threshold)

• You need to identify more "at-risk" mid-tier customers (adjust Segment B)

• Industry standards or competitive analysis suggests different segmentation

Tips for Optimization:

1. Start with defaults: The default settings work well for most businesses

2. Make incremental changes: Adjust thresholds gradually and monitor the impact

3. Align with business strategy: Choose Sales $ or Margin $ mode based on your key priorities

4. Review regularly: Periodically assess whether your segmentation reflects current business reality

5. Consider customer count: Very high Segment A thresholds may result in too few customers in Segments B and C for meaningful analysis

Understanding Segment Changes

After adjusting your ABCD Segmentation settings, customers may move between segments. This is normal and expected:

• Customers entering Segment A should receive your highest level of service and attention

• Customers dropping from A to B or C may need re-engagement strategies

• Customers in Segment D should be evaluated for profitability improvement or discontinuation

Track these movements over time to understand customer lifecycle patterns and the effectiveness of your retention strategies.

Frequently Asked Questions

Q: How often are ABCD segments recalculated?

A: ABCD segments are recalculated during each data sync cycle based on the configured time period and current settings.

Q: What happens if I set Segment A to 95%?

A: This would create a very large "A" segment that includes most of your customers. While allowed, this may not provide meaningful differentiation between your top and mid-tier customers.

Q: Can Segment B be 0%?

A: No. Segment B has a minimum value of 5% to ensure meaningful segmentation.

Q: Why does Segment D appear separately?

A: Segment D represents customers with negative margin contribution. This segment exists independently of the A/B/C segmentation and can contain any number of customers regardless of your threshold settings.

Q: Which mode should I use - Sales $ or Margin $?

A: This depends on your business priorities:

• Use Sales $ if revenue volume is your primary metric

• Use Margin $ if profitability is more important than raw sales volume

• Many businesses find Margin $ mode more valuable for strategic decision-making

Getting Help

For additional assistance with ABCD Segmentation Settings:

• Contact Cavallo Support for questions specific to your configuration

• Consult with your Customer Success Manager for strategic guidance on optimal settings

Summary

ABCD Segmentation Settings give you powerful control over how your customers are categorized based on their value to your business. By customizing the threshold percentiles for each segment, you can:

• Focus resources on your most valuable customer relationships

• Identify at-risk customers who need attention

• Make data-driven decisions about customer engagement strategies

• Track customer movement between value tiers over time

Start with the default settings and adjust based on your specific business needs and strategic priorities. Regular review and refinement of your segmentation thresholds will help you maintain an accurate view of your customer base and maximize the value of your customer relationships.