Customer Portfolio Management Research Articles

Dialectic critical realism in business marketing: dialectic customer portfolio management

PurposeThis study aims to contribute to the field of customer portfolio management by proposing a novel approach rooted in dialectic critical realism (DCR). DCR, as an ontological theory, enables a fundamental reimagining of customer portfolio management as a dialectic process. The conceptualized dialectic portfolio management is motivated by the concept of “absence”, akin to Hegelian “antithesis”, which highlights limitations, problems and tensions in portfolio management. In essence, “absence” serves as a diagnostic tool that directs portfolio actions towards resolving problems by pursuing a more comprehensive “totality”, similar to the Hegelian notion of “synthesis”.Design/methodology/approachThis conceptual paper theorizes DCR in business marketing and customer portfolio management.FindingsDCR conceptualizes customer portfolios as relational structures characterized by omissions and tensions. These issues are addressed through a dialectic synthesis aimed at achieving a more comprehensive “totality”. Consequently, DCR guides portfolio management to continually re-think the connections and distinctions that define a portfolio within its network context. This dialectic process is facilitated by a novel vocabulary that enhances the understanding of network and portfolio relations, incorporating concepts such as “intrapermeations”, “existential constitutions”, “intra-connections” and “intensive” and “extensive” portfolio practices.Originality/valueThis study aims to foster a fresh and process-oriented perspective on portfolio management, drawing inspiration from the growing demand for enriched dialectic theorizing within the realm of business marketing. The adoption of a dialectic process orientation based on DCR revolutionizes the comprehension of portfolio management by fundamentally reimagining the underlying ontological assumptions that underpin the existing body of literature on customer portfolios. Moreover, DCR asserts that ethical considerations are inextricably linked to human experiences and associated practices, emphasizing ethics as an integral component of customer portfolio management.

A decision‐making support system module for customer segmentation and ranking

AbstractMany businesses have their own method of segmentation and of customer evaluation to help them give the appropriate managerial attention to each segment and each customer. This paper proposes a more refined and objective decision‐making support system module that allows segmentation and full ranking of customers. It offers several improvements and advantages over the state‐of‐the‐art methods. The module is based on customer criteria with quantitative values that can be extracted from the organizational information system. Customer scores are calculated objectively on the basis of measurable criteria without the need for human evaluation. The module determines the relative location of each customer within that customer's segment (for example, Platinum, Gold, Silver, and Bronze), tracks changes that occur over time, and enables a full and precise ranking of the customers according to company‐defined criteria. The module can be computerized and results can be generated quickly at any time, using up‐to‐date data. The module's design was based on feedback from a survey conducted among 39 managers and its applicability was successfully demonstrated in a real‐world case study. The decision‐makers in the organization where the case study was conducted stated that they would apply the proposed method quarterly (four times a year) instead of once a year. It was also found that the proposed method saves about 90% of the time and resources required to prepare a customer portfolio management and customer ranking compared to the subjective method that was used.

Mobile CRM development for real estate agents

PurposeReal estate agents are professionals who need up-to-date and accurate information about their clients in order to maintain profitable and long-lasting relationships with each of them. A satisfied customer can be very valuable and profitable in the long term. This research focuses on solving the problem of the lack of a mobile Customer Relationship Management (CRM) adapted to the needs of professionals. The importance of solving this problem is related to the importance of optimizing work and resources in a highly abundant information industry.Design/methodology/approachIt was developed of a CRM for mobile devices capable of managing information about the customers and business partners of each user, which provides a set of features well defined by the professionals. These features were collected through 15 face-to-face interviews and validated with six video conference interviews with industry specialists. For the development and evaluation of this artefact was followed the DSR methodology, corresponding each interview to an iteration of this model.FindingsFrom this research resulted a selection of functionalities considered essential to the real estate agent's work. These features were successfully implemented in a mobile application that real estate agents appreciate for its simplicity and that they feel adds real value to their daily lives. Using this service, the productivity and performance of real estate agents might be improved.Originality/valueIt was verified that the mobile CRM solution developed is a desired solution by real estate agents in terms of customer portfolio management, enhancing the evolution of their relationships and monitoring professional's performance.

Hybrid model for sales forecasts in a context of the consolidation of new products on the market: an application in the agro-industrial sector

Purpose – This paper aims to evaluate the performance of the consolidation process of a product recently included commercially in a portfolio through a sales forecasting model that, focused on several segments of the customer portfolio, supports the commercial decision-making.Design/methodology/approach – This approach uses the ABC Curve methodology to define the analysis in segments of relevance and then integrates two methods: (i) the Markovian models in discrete time and annual step to predict the transition behavior between the new replacement product and the consolidated ones; (ii) first-order and second-order exponential smoothing time series forecasting method to predict products in aggregate demand. This model was applied to a seed distributor company based on its customer portfolio and historical data for sales between 2011 and 2019.Findings – The sales forecasting benchmark scenario, designed for stable conditions in the behavioral adherence of new products and the commercial strategy, resulted in a quantitative support for targeting and monitoring commercial efforts to maximize the global performance for this process.Originality/value – Besides presenting a new Markov Chains commercial management approach, the model developed introduces a quantitative tool into the literature for targeting the customer portfolio management processes in the context of replacement in a product portfolio.Keywords - Curve ABC. Markov Chains. Sales Forecasting. Exponential Smoothing. Customer Portfolio Management.

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

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.

Towards a taxonomy-based preferred-customer model for suppliers in air cargo express service markets

Drawing on social exchange and push–pull–mooring theories, this paper develops a taxonomy-based preferred-customer model for B2B air express markets. Our model extends the conventional bilateral customer-supplier relationship perspective of customer portfolio management to include competition effects for more comprehensive (trilateral) strategic decision making. Based on this unified framework, our a survey of 180 customers of air cargo express carriers identifies three distinctive groups of preferred customers. In addition to the effect of competitors on air express carriers’ prioritization of customers, which is further complicated by a satisfaction paradox and spurious loyalty, we further establish classification indicators for differentiating preferred from non-preferred customers. Notably, although commonly used in practice, we find sales volumes to be ineffective for that purpose.

Uncertainty representation and risk management for direct segmented marketing

ABSTRACTMining for truly responsive customers has become an integral part of customer portfolio management, and, combined with operational tactics to reach these customers, requires an integrated approach to meeting customer needs that often involves the application of concepts from traditionally distinct fields: marketing, statistics, and operations research. This article brings such concepts together to address customer value and revenue maximisation as well as risk minimisation for direct marketing decision-making problems under uncertainty. We focus on customer lift optimisation given the uncertainty associated with lift estimation models, and develop risk management and operational tools for the multiple treatment (recommendation) problem using stochastic and robust optimisation techniques. Results from numerical experiments are presented to illustrate the effect of incorporating uncertainty on the performance of recommendation models.

Cooperation Agreements and Customer Portfolio Management in Hotel Industry: The Airline Market Segment

Cooperation Agreements and Customer Portfolio Management in Hotel Industry: The Airline Market Segment

“How does customer perception of salespeople influence the relationship? A study in an emerging economy”

Sales and sales force management is a complex activity that largely determines a company's commercial success. Customer perception of the salespeople in terms of expertise, trust, interaction, and risk can drive the establishment of long-lasting ties, making customer portfolio management profitable in the long-term. Yet to date, while much work has been done on company-customer relational issues, very few studies have taken customer perception of salespeople as their reference. Moreover, most existing studies have taken western countries and developed economies as their reference of analysis.The present study, in contrast, provides an analysis of an emerging economy context, Peru. Using a sample of more than 400 consumers and structural equations analysis, this article presents a model based on the Social Exchange Theory. The final part of the study presents the theoretical discussion together with key implications and recommendations for management.

Critical success factors for customer portfolio management

Since the past 40 years, considerable attention has been paid to the different customer portfolio models. Although most companies understand the importance of managing their customer portfolios, they actually manage the process intuitively or on the basis of CRM systems, which do not always ensure optimal results. At the same time, the extant literature fails to offer a coherent list of the key factors for successful implementation of customer portfolio models. This paper offers a systematic view of the critical success factors for customer portfolio management. They are categorised as strategic, tactical and operational. Emphasis is placed on the grouping of success factors and the interaction between them, rather than the identification of individual factors. The research and managerial implications of the proposed framework are emphasised and opportunities for identification of the success factors along with their associated sector-specific operational variables for further development of a research methodology are presented.
 Keywords: Customer portfolio, CRM, critical success factors.

Sales force commissions in relationship marketing

PurposeThis paper aims to examine the roles of both aggregate and specific commission rates to control the sales force in relationship marketing with a customer portfolio.Design/methodology/approachDrawn on the concept of customer lifetime value and agency theory, the author calculated both specific and aggregate sales force commission rates in a relationship marketing perspective. Contrary to the prior researchers, the author assumes that, at any period, both the gross margins and retention rate of each customer are a stochastic function of the salesperson’s effort.FindingsThe results indicated that when there is symmetric information between a sales manager and salesperson, both aggregate and specific commissions can be used to monitor the sales force. Under asymmetric information, however, each type of commission rate can only be used under certain conditions. In addition, conditions in which the aggregate commission is equivalent to the specific commission for each customer were derived.Research limitations/implicationsHypothetical data were used to explain the model. It would be more appropriate to use real data to see its managerial relevance.Originality/valueIn the author’s knowledge, this study is the first that specifically links scholastic customer’s retention and salesperson commission rate to monitor salesperson effort in relationship marketing. It is also the first that shows in which conditions aggregate and specific commission rates are equal for a salesperson’s customer portfolio management.

Customer Profiling in Complex Analytical Environments Using Swarm Intelligence Algorithms

Customer profiling is always an interesting task from perspective of business. It became even bigger challenge in situation of complex analytical environment. Complex analytical environment can be caused by multiple modality of output variable as well as from big data environment, which cause data complexity in way of data quantity. As an illustration of presented concept particle swarm optimization algorithm will be used as a tool, which will find profiles from developed predictive model of neural network. Presented methodology has practical value for decision support in business, where information about customer profiles which prefers to buy some product or group products are valuable information for campaign planning and customer portfolio management.

A hybrid model for customer portfolio analysis in retailing

Purpose Marketing/finance interface and application of its new insights in marketing decisions have recently found great interest among marketing researchers and practitioners. There is a relatively large body of marketing literature about incorporating modern portfolio theory (MPT) into customer portfolio context and taking advantage of it in marketing resource allocation decisions. Previous studies have modelled customer portfolio risk in the form of historical return/profitability volatility of customer base. However, the risk is a future-oriented measure, and deals with future volatility associated with return stream. This study aims to address this research problem. Design/methodology/approach The well-known Pareto/non-binomial distribution (NBD) approach is used to model customer purchases in a non-contractual setting of research practice. Then, the results were used to simulate the customers’ future buying behaviour and associated returns via the Monte Carlo simulation approach. Subsequently, the mean-variance portfolio optimization model was applied to find the optimal customer portfolio mix. Findings The results illustrated the better performance of the proposed efficient portfolio versus the current customer portfolio. These results are applicable in analyzing customer portfolio composition, and can be used as a guidance to make decisions about marketing resource allocation in different segments. Originality/value This study proposes a new approach to analyze customer portfolio by using the customers’ future buying behaviour. Taking advantage of rich marketing literature about statistical assumptions describing the customers’ buying behaviour, this study tries to take some steps forward in the application of the MPT theory in customer portfolio management context.

Customer portfolio management (CPM) for improved customer relationship management (CRM): Are your customers platinum, gold, silver, or bronze?

This article uses the customer portfolio management (CPM) approach to examine how a company can define the value of customers and segment these customers into portfolios. By segmenting customers into portfolios, an organization can better understand the relative importance of each customer to the company's total profit. Such an understanding will help companies retain valuable customers create additional value with these customers through relationship development.The purpose of this article is to contribute to the body of customer relationship management (CRM) literature by introducing a conceptual framework of the customer portfolio management (CPM) matrix, which focuses on two issues: (1) cost to serve and (2) value of the customer to the company. From this framework, a firm can segment its customer base into four portfolios, platinum, gold, silver, and bronze, and deliver services accordingly.

Hedging Customer Risk

Companies and academics rarely account for balancing the risk and reward in a customer portfolio of a firm. Unlike a stock portfolio where both measures are taken into account, many people tend to look only at the customers’ average profit value. Applying financial portfolio management techniques to customer management has been an under-researched topic in academic marketing literature. In this paper, we propose a methodology that allows firms to create a customer portfolio maximizing return for a level of risk. We illustrate the potential benefits by optimally weighting the customer segments based on their risk–reward impact on the firm’s overall customer portfolio. Our method can be used to assist investors in their valuation of a firm or to value an acquisition with a primary goal of increasing the customer base. We use a dataset of 1,901 customers covering seven quarters for a total of 13,307 observations of a major US bank with a market capitalization exceeding $40 billion. We show measurable potential increase in profit by implementing customer portfolio management practices.

Hedging Customer Risk

Companies and academics rarely account for balancing the risk and reward in a customer portfolio of a firm. Unlike a stock portfolio where both measures are taken into account, many people tend to look only at the customers’ average profit value. Applying financial portfolio management techniques to customer management has been an under-researched topic in academic marketing literature. In this paper, we propose a methodology that allows firms to create a customer portfolio maximizing return for a level of risk. We illustrate the potential benefits by optimally weighting the customer segments based on their risk–reward impact on the firm’s overall customer portfolio. Our method can be used to assist investors in their valuation of a firm or to value an acquisition with a primary goal of increasing the customer base. We use a dataset of 1,901 customers covering seven quarters for a total of 13,307 observations of a major US bank with a market capitalization exceeding $40 billion. We show measurable potential increase in profit by implementing customer portfolio management practices.

Managing portfolios of interconnected customers: evidence from Russian B2B market

PurposeThe purpose of this paper is to broaden the current view of customer portfolio management by including the notion of customer interconnectedness.Design/methodology/approachThe previous research in customer portfolio theory is reviewed, with special attention to customer interconnectedness. Customer interconnectedness as a criterion to build customer portfolios is studied in the example of large Russian b2b company. First, the results of participative inquiry research within the company are presented and then the insights from five in‐depth interviews are described.FindingsFindings suggest that the assumption of customer independence in a portfolio, on which most of customer portfolio models are based, may not fit certain markets and industries. This paper sheds light on to the specifics of customer portfolio building, in the Russian context and results in the customer interconnectedness assumption.Research limitations/implicationsAdditional research beyond the provided exploratory study is needed to quantitatively test the assumption and generalize the results. The main research implications relate to the new perspective on customer portfolio theory based on customer interconnectedness.Practical implicationsThe paper provides researchers and practitioners with insights into customer portfolio models specifics existing in Russia. This knowledge can be helpful, also, for foreign companies entering the Russian market.Originality/valueThe process of customer portfolio building in the Russian b2b markets has been addressed for the first time in b2b marketing research. The analysis of customer portfolio building in Russian b2b context shows that customer independence assumption is challenged and should be replaced with customer interconnectedness approach.

An Analysis of the Link between Customers' Intention to Recommend a Firm and the Lifetime Value of its Customers

The Net Promoter Score (NPS) concept, which is widely used among practitioners, assumes that there is a positive and nonlinear linkage between intention to recommend a firm (positive word of mouth) and Customer Lifetime Value. However, this critical assertion for customer portfolio management has not yet been empirically proved. This study uses a data set from a financial service provider to analyze the link between customers' intention to recommend a firm and Customer Lifetime Value. It reveals that intention to recommend a firm increases contribution margins but it neither enhances customer loyalty nor Customer Lifetime Value. However, satisfaction has a significant influence on Customer Lifetime Value. Thus, the expected nonlinear link between intention to recommend and Customer Lifetime Value cannot be proved, so the significance of the NPS concept for customer management cannot be verified.

MTM: Improving positioning and integration

MTM: Improving positioning and integration

Introducing Busy Customer Portfolio Using Hidden Markov Model

Due to the effective role of Markov models in customer relationship management (CRM), there is a lack of comprehensive literature review which contains all related literatures. In this paper the focus is on academic databases to find all the articles that had been published in 2011 and earlier. One hundred articles were identified and reviewed to find direct relevance for applying Markov models in CRM. Forty four articles were selected and categorized on two major subclasses: articles which had used Markov chain models (MCM) in CRM and those which had applied hidden Markov models (HMM) in CRM. Findings of this paper indicate that applying HMM in CRM is approximately rare, since it contains 27.2% of the total number of published articles. To complete investigation a two-step framework has been suggested for using HMM in busy customer portfolio management. ...