This research describes principles of alumni segmenting that foster innovation and entrepreneurship in universities (further HERI (Higher Education and Research Institutions)). It is based on previous research, which describes that among many other ways of mutual interaction, all alumni are university lifetime customers [41]. Customers have very important role in fostering organization’s innovation capacity – for a sustainable advancement organizations must manage knowledge to, from and about customers [15]. Customer engagement requires deep knowledge and vision on advancement of customers from initial involvement to a deeper and more meaningful cooperation which involves co-creation and innovation that set the base for entrepreneurship in HERI. Article describes the case of Riga Technical University how alumni engagement has resulted in various organizational developments that support innovations and entrepreneurship.