Bco6604 Customer Relationship Management : Assessment Answers

Brief analysis or literature review of your topic area this section should address issues associated with strategy, benefits, challenges and technology needs.

The paper must include industry examples to support the four areas which need to be selectively referred to in the main paper. Direct quotes from the literature or case study should not be overly used and need to be minimal— direct quotes are not considered as part of the overall word count,

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).

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
• 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).

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.

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.