A customer portfolio management model that relates company's marketing to its long-term survival.

Abstract

A typical customer relationship management model is designed to increase the value of a company’s existing customers in the next period. While useful in the short term, such a process, followed blindly period after period, would drive the company out of business when those existing customers all eventually died. In reality, no company would do this. Instead, these short-term models are nested within a long-term view of customer management, and it is long-term customer management that the proposed model addresses. The model assumes that a company has identified a set of customer types across which it needs balance in order to remain viable in the long-term (e.g., a company might wish to maintain a supply of “entry-level customers” in order to eventually replenish its collection of more profitable “loyal customers”). Though the model is applicable in any industry, we illustrate it for automobiles. Results reveal the strengths with which each marketing intervention causes General Motors to attract each of their desired customer types. The model is extended to also reveal differences in the ways that marketing interventions by Ford, Toyota, and Honda change the strengths with which those automakers attract customers.Supplementary InformationThe online version contains supplementary material available at 10.1007/s11747-020-00765-9.