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Customer Portfolio Management Strategies

Customer portfolio management takes a strategic approach to deploying CRM by viewing customers as valuable assets rather than an undifferentiated marketplace. It involves classifying customers into segments based on metrics like profitability, needs, costs to serve, and buying trends. Analyzing these metrics reveals that a small portion of top customers often account for the majority of profits, while a segment of unprofitable customers can result in significant losses. Effective customer portfolio management identifies these groups and takes actions like reallocating resources, adjusting product offerings, or exiting unprofitable customer relationships to optimize overall portfolio performance.

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JessRaj Denis
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318 views12 pages

Customer Portfolio Management Strategies

Customer portfolio management takes a strategic approach to deploying CRM by viewing customers as valuable assets rather than an undifferentiated marketplace. It involves classifying customers into segments based on metrics like profitability, needs, costs to serve, and buying trends. Analyzing these metrics reveals that a small portion of top customers often account for the majority of profits, while a segment of unprofitable customers can result in significant losses. Effective customer portfolio management identifies these groups and takes actions like reallocating resources, adjusting product offerings, or exiting unprofitable customer relationships to optimize overall portfolio performance.

Uploaded by

JessRaj Denis
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd

Customer Portfolio

Management: Taking CRM to


the Next Level
Overview
• Most companies claim to be customer-
centric, but are not in reality
• Traditional CRM fell short of promise,
because of process automation at the
tactical / departmental levels
• Customer Portfolio Management – a
strategic approach to deploying CRM
Customers: Assets or Marketplace?
• Customers are revenue producing assets
• Not an undifferentiated marketplace
• Do you know your customer segments?
• What metrics do you use to measure
customer relationships?
• Few companies measure CR according to
its strategic goals
• Fewer companies measure CR in terms of
cost and capital to acquire and retain them
The Transition from Market
Share to Customer Share
• “The best 20 percent of customers account for 150
percent of total profits. The worst 20 percent typically
lose money equal to 75 percent of profits.” - Geoffrey
Colvin (Angel Customers & Demon Customers)
• Companies must focus more on identifying and
preserving valuable customers instead of retaining and
growing market share
• Acquisition of AT&T Wireless by Cingular
• The real motive was AT&T’s customers
• Each AT&T customer was worth $1,860 to Cingular
Do You Have Any Unprofitable
Customers?
• bottom 20 percent of a company’s customers
account for losses of up to 75 percent of total
profits
• cost of customer acquisition is much more
expensive than the cost of selling to the existing
base.
• Classify customers based on key metrics such
as
– Needs, profitability, cost to serve, buying trends, and
strategic value
AGF – Investment Management
Company
• Facing a mature market, not much room
for growth
• Used analytics to find that
• 29% of customers were responsible for all
asset growth
• Yet, only 50% of them were receiving
adequate support
• Was able to design programs that used
resources more appropriately
Knowing the customer
• Use CRM tools to develop metrics
• Classify customers into groups
Customer portfolio
What next?
• Profit laggards – Identify cause of
nonprofitability and control costs
• Revenue laggards – Valuable opportunity
to readjust packaging and positioning of
products
• Unprofitable customers
– What makes them unprofitable?
– Any Plan of Action to make them profitable
What to do with them?
More specific suggestions
Peoplesoft
• PeopleSoft’s CRM 8.9 supports customer
portfolio management

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