Significance of Customer Portfolio Management in Modern Business Essay

Significance of Customer Portfolio Management in Modern Business Environment - Essay Example In order to identify the changing customer preferences, firms are to manage their customer portfolios. Many advanced technologies are available today that can manage customer portfolios and thereby keep in touch with changing customer interests. Keeping well planned customer portfolios can strengthen customer relations and thereby customer retention for a long term. A loyal customer is an invaluable asset of any organisation that contributes to the accomplishment of the firm’s long term goals and objectives. Scholars reflect that efficient customer portfolio management at different levels of an organisation is a fundamental driver of strategic as well as financial success. The concept of customer portfolio can significantly contribute to the firm’s efforts to retain the profitable segments of its customers because customer portfolio is a potential way to achieve enhanced customer satisfaction. According to experts, â€Å"in much the same way that we can examine a portf olio of products or brands, the importance of customers as assets and investment centres mandates a similar portfolio analysis† (Hooley, et al. 2008, p.436). This paper will explore the concept of customer portfolio management. ... Thorough analysis of customer portfolios can assist a company to identify how a specific customer group is performing. To illustrate, customer portfolios can be beneficial for a construction company to evaluate the account receivable of home builder customer group to obtain a clear view of the level of financial risk, in case there is a slowdown in the market for homes. A company’s customer portfolio is comprised of customers who are grouped together based on or more ‘strategically important variables’ (Ibid). Generally each customer is linked to just one particular group in the portfolio. At one point, each customer is treated as unique and at another point all customers can be treated as identical (Ibid, p.125). While observing the corporate world, most of the firms are strategically positioned somewhere between these two points. Referring to various customer management theories, it may not be a good strategy to manage all customers in the same way unless such a policy makes strategic sense for doing so. Customers vary on the grounds of revenues and cost profiles and each customer has different tastes, preferences, and expectations (Yang & Peterson, 2004). As a result, a company has to manage customers in different ways considering their particular needs and wants. To make it more clear, customized product and face to face account management may satisfy the interests of some customers in the B2B context whereas standardized product and web-based self-service would be more effective in meeting the needs of some other customers. Undoubtedly, customers constitute an invaluable asset of any organisation regardless of its size and nature (Conejo, 2013). Unlike what many people think it is not factors