Customer Portfolio Management: Implementation and Challenges Report

This report provides a comprehensive overview of Customer Portfolio Management (CPM), a crucial aspect of Customer Relationship Management (CRM). It begins by defining CPM and its significance in evaluating customers and understanding the value they generate. The report then delves into the benefits of CPM, such as improved revenue generation, enhanced customer behavior insights, and streamlined marketing strategies. The implementation section discusses the criteria for customer evaluation and the process of creating customer profiles and grouping customers based on various factors. The report also addresses the challenges in CPM, including difficulties in customer grouping and the impact of changing market trends. Finally, it concludes by emphasizing the importance of CPM for marketers in assessing customers, implementing effective strategies, and fostering customer relationships. The report highlights the importance of customer profiling for tracking customer behavior and competitive analysis. It also contains references from various marketing sources.

Running head: CUSTOMER PORTFOLIO MANAGEMENT
Customer Portfolio Management
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Executive Summary
The following report is based on the Customer Portfolio Management. It is an tool that is used b
the marketers to evaluate their customers and the value created by them, based on different
criteria of evaluation. In this process the customer profiles are made and based on their
similarities grouping is done, it lets the marketers plan strategies related to resource allocation so
that they get maximum profit. The following report contains discussion on the concepts of
Customer Portfolio Management, its implementation, benefits and challenges.

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Table of Contents
Introduction......................................................................................................................................3
Customer Portfolio Management concept...................................................................................3
Benefits of Customer portfolio management...................................................................................4
Implementation................................................................................................................................5
Challenges in Customer Portfolio Management..............................................................................6
Conclusion.......................................................................................................................................6
References........................................................................................................................................7

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Introduction
Customer Portfolio Management concept
Customer portfolio management is an important area of Customer Relationship
Management. The premises of Customer Portfolio Management, is customer relationship from
transactions to the strategic partnerships and its management depending upon the value that it
provides to the selling company. It refers to the selection of the customers of a company and
grouping them according to their buying pattern. It is a method is used in Business-to-Business
companies with an aim for developing customer relationship for profit and over all sustainability.
In this process, the customers of any company are identified and their evaluation is done with the
help of useful criteria. For the analysis of the customers and then grouping them in categories it
is very important that the criteria used for evaluation is defined (Terho 2014).
The customers differ from each other based on the value they provide to the company.
Some customers are loyal and they are consistent buyers while other customers are unpredictable
and there buying pattern is not consistent. Companies rank their customers based on the value
they generate for the company. The objective of customer relationship management is to evaluate
the value that is generated by the customers (Verhoef and Lemon 2013).
It is a practice by which the company analyzes what are the current and future values provided
by the customers of any company so that they can develop a balanced structure of customer base
by the help of resource allocation to different customers and customer groups. The main purpose
behind this theory is to create a customer portfolio balance (Nenonen and Storbacka 2014).

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Benefits of Customer portfolio management
 Customer portfolio management is a very important part of Customer Relationship
Management. Making the portfolio of the employees lets the company and the marketers
to evaluate the revenue being generated by the customers, the company can understand
the value a particular customer or segment provides to the company.
 Making the portfolio of the customers lets the marketers study the customer buying
behavior, because it forms the basis for the grouping of the customers
 Once the customers are grouped it becomes very easy for the suppliers to cater to the
demand of the various customers as per the value the provide to the organization.
 Profiling the customers makes it easier for the marketers to keep a record of their
customers.
 It makes the process of segmentation, targeting and positioning very easy and helps in
implementation of marketing strategies.
 It is helpful in sales forecasting (Berry 2015).
 When customer portfolio is made the marketers get an idea that which are profit making
areas or segments, once it is kwon to the marketers they can plan budgets and invest more
in the profit generating areas.
 In order to increase their customer base the marketers they can focus on the areas where
they receive less revenue, with market research they can investigate the reason and take
measures for increasing sales in those areas.
 It makes organizing easier
 It ensures effective Customer Relationship Management

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 There is effective utilization of the resources of the organization (Carmen, and Marius
2016)
Implementation
The evaluation criteria includes the basic information about the customers like
Name of the company, business of the customers, investor, governmental organization,
manufacturer, contractor, consultant and many more
People who are in relationship on either customer’s side or the company’s side
The criteria of evaluation are
Type of customer relationship, whether it is recurring, partnership and many more (Tarasi et al.
2013)
In the process of making the customer portfolio the marketers make the profiles of their
current customers, their information and details are included in their profiles. Marketers with the
help of their research and development team analyze the revenue generated by the each
customers and then these customers are grouped based on the certain criteria, this criteria might
be based on the income, age or gender or it can be geographically based on the convenience and
understanding of the market researchers. Evaluation of the value created by various customers
the marketers can now forecast the sales and plan strategies for different groups. This way they
can manage their costs. It is a very important tool for the marketers that help in effective
decision-making. Many companies do manage the customer portfolios by themselves, while
others hire agents or consultants to do the job (Armstrong et al. 2015).

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Challenges in Customer Portfolio Management
While making the customer portfolio a number of barriers can be faced by the marketers.
Te marketers might find it difficult to group the customers in a proper way because not all
customers are loyal and predictable. If the team fails to identify correctly the value created by the
customer then a wrong customer profiling will be done. If the profiling of the customers are not
done accurately it might happen that they invest in wrong customer group, it would be waste of
the resources. Change in trend often changes the buying behavior of the customers and the
attitude of the customers towards any particular brand this can make create conflict in the
customer portfolio and its implementation will not be effective. Market research sometimes gives
conflicting results, which will provide misguiding basis for customer portfolio management, and
hence it will lead to ineffective customer portfolio management (Hollensen 2015).
Conclusion
Customer Portfolio management is an important tool for the marketers to assess their
existing customers and evaluate the value that is created by the various customers. It is an
important aspect of customer relationship management. It helps the organization in grouping its
customers so that marketers can prioritize the customers based on the value that they create for
the company, it lets the marketers to implement proper strategies for different customer groups.
The customer profiling is very important it also helps the business organization to keep a track of
their customers, the marketers have to keep a track of their customers who are their existing
buyers, their buying behavior can be studied. The marketers can also study the buying behavior
of customers of their rival companies so that they can implement action plans to increase their
customer base.

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References
Armstrong, G., Kotler, P., Harker, M. and Brennan, R., 2015. Marketing: an introduction.
Pearson Education.
Berry, L.L., 2015. Relationship marketing of services—growing interest, emerging
perspectives. Journal of the Academy of marketing science, 23(4), pp.236-245.
Carmen, R. and Marius, S., 2016. Customer Loyalty Using Customer Relationship
Management. Management Strategies Journal, 31(1), pp.285-288.
Hollensen, S., 2015. Marketing management: A relationship approach. Pearson Education.
Nenonen, S. and Storbacka, K., 2014. Management of customer assets for increased value
capture in business markets. Management Decision, 52(1), pp.101-121.
Tarasi, C.O., Bolton, R.N., Gustafsson, A. and Walker, B.A., 2013. Relationship characteristics
and cash flow variability: implications for satisfaction, loyalty, and customer portfolio
management. Journal of Service Research, 16(2), pp.121-137.
Terho, H., 2014. Customer portfolio management: the construct and performance.
Verhoef, P.C. and Lemon, K.N., 2013. Successful customer value management: Key lessons and
emerging trends. European Management Journal, 31(1), pp.1-15.