Customer Portfolio Research Articles

Customer portfolio analysis among competing retail stores

Customer portfolio analysis may be useful for improving retailers' attempts to successfully position their stores in the minds of customers. A customer portfolio for a store includes new-primary, loyal-primary, and defector (formerly primary) customers, as well as occasional customers who shop primarily at competing stores. Customers' attitude-accessibilities with respect to first-linking a given store with evaluative attributes may offer useful information about the reasons for the shopping behavior of customers in a store's customer portfolio. We offer several hypotheses related to customer portfolio analysis and store attitude-accessiblity in the present article. The principal hypothesis (H1) examined is that the attitude-accessibility of the major supermarkets competing in the same metropolitan area will differ substantially among loyal, new, competitors' customers, and defector customer segments for each supermarket. More specifically, for a given store, greater shares of loyal and new customers will exhibit positive, store attitude-accessibility profiles compared to noncustomers and defectors (H2). A greater share of customer defectors will exhibit a negative attitude-accessibility profile compared to each of the loyal and new shopper segments (H3). The results of a cross-sectional telephone survey of 317 supermarket shoppers are described, and the findings support these hypotheses. We conclude with recommendations for planning changes in retailing positioning strategies and for monitoring the success of implementing these strategies.

A practical approach to maximizing customer retention in the credit card industry

One of the main problems currently facing credit card issuers is the increasing number of credit card holders who are using their cards less often (i.e. attrition) and/or returning their cards (closures). This problem is of particular concern as the total number of credit cards held by consumers is declining by approximately 0–6% per month, and the number of new applicants is also running at an all time low (less than 1% per month). Most of the published literature in the broad area of credit cards looks at credit scoring, rather than the need for card issuers to identify and retain a profitable portfolio of credit card customers. The overall objective of this paper, therefore, is to construct a customer database model with the capacity to predict which customers are most likely to close their accounts and to identify certain customer characteristics which can be used by the card issuer as part of a marketing or relationship strategy to maximize retention and increase customer profitability. The database model is constructed using linear discriminant analysis, which is applied to a sample of approximately 17 000 UK bank credit card holders using various behavioural and sociodemographic variables, and tested on a holdout sample of 10 000 cases.

The Use of Customer Portfolio Theory

The development of a customer portfolio is a logical process for the development of a business. Conceptual work, using a range of independent variables, has been undertaken in the past decade but few (if any) results of its application have been documented. Shows how a fabric supplier has developed a system for customer portfolio construction based on current profitability and the nature of the current relationships between itself and garment manufacturers. Details the costs, together with more qualitative variables, used in the system. Provides suggestions for future resource allocation.

The UK's Regional Research Laboratory Initiative

This article examines the development of a series of newly created research centres in the UK. They are of interest because of the novelty of their mission – to conduct research into the techniques and methods of handling large-scale datasets and, over a three-year period with Research Council support, to develop a portfolio of activities and customers able to sustain the Centre when core funding has expired. Christine Tiler examines the range of experience encountered by the Laboratories and draws out key factors which influenced their development. She pays particular attention to those factors which affected their ability to transform themselves into self-funding research and development organizations.

Customer portfolio analysis for strategy development in direct marketing

Segmenting existing customers into distinct groups based on their dollar purchases and the product categories which they buy can reveal which accounts are contributing substantially to net profits and which should receive more or less attention relative to others. Detailed profile analyses may be developed on the demographics, product-related psychographics, and buying behavior of competitors’ products for each customer segment. Insights for refining existing and creating new product-market positioning strategies are likely to result from such profile analyses. In the present article a framework for performing customer portfolio analysis is described and applied, using the customer database for a large, retail-direct marketing firm. The article concludes with recommendations for additional empirical research and strategic use of customer portfolio analysis.

A customer selection strategy for business markets

The attainment of corporate objectives of profitability depends fundamentally on the allocation of limited resources to the generation of revenue in the most cost‐effective way. Customers, or groups of customers, provide revenue—consequently the selection of a “portfolio” of customers is of major importance as an element of corporate strategy. However, customers, or potential customers, vary by size, by market position, by the degree of understanding of suppliers’ offerings and in many other ways. This paper attempts to outline a systematic approach to the development of a portfolio of customers and market segments taking into account a number of the above factors.

A portfolio approach to account profitability

All too often salespeople adopt a sales volume orientation to the detriment of company profitability. This article presents a diagnostic and prescriptive tool that can assist salespeople to adopt more of a profitability perspective. This tool, the customer portfolio, allows sales personnel to analyze their present customer base in terms of present and potential profit contribution. Further, the tool suggests actions necessary to effect a desired customer base.

A MARKETING APPROACH FOR CUSTOMER RETENTION

Consumer marketing companies have lavished more resources on attracting new customers than on satisfying old customers. In today's low growth and highly competitive marketplace, however, customer retention increasingly joins customer getting as an important area of analysis and planning. Marketers can better cultivate relationships with existing customers in these ways: designing an optimal customer portfolio, formulating a special marketing mix, and modifying the marketing organization. The balancing of marketing efforts between winning new customers and holding onto old ones will prove instrumental in pursuing sales and profit growth in the 1980s.

Contraction Mappings in the Theory Underlying Dynamic Programming

Contraction Mappings in the Theory Underlying Dynamic Programming