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Customer Portfolio Management: Taking CRM to the Next Level

Customer Portfolio Management: Taking CRM to the Next Level. Overview. Most companies claim to be customer-centric, but are not in reality Traditional CRM fell short of promise, because of process automation at the tactical / departmental levels

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Customer Portfolio Management: Taking CRM to the Next Level

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  1. Customer Portfolio Management: Taking CRM to the Next Level

  2. Overview • Most companies claim to be customer-centric, but are not in reality • Traditional CRM fell short of promise, because of process automation at the tactical / departmental levels • Customer Portfolio Management – a strategic approach to deploying CRM

  3. Customers: Assets or Marketplace? • Customers are revenue producing assets • Not an undifferentiated marketplace • Do you know your customer segments? • What metrics do you use to measure customer relationships? • Few companies measure CR according to its strategic goals • Fewer companies measure CR in terms of cost and capital to acquire and retain them

  4. The Transition from Market Share to Customer Share • “The best 20 percent of customers account for 150 percent of total profits. The worst 20 percent typically lose money equal to 75 percent of profits.” - Geoffrey Colvin (Angel Customers & Demon Customers) • Companies must focus more on identifying and preserving valuable customers instead of retaining and growing market share • Acquisition of AT&T Wireless by Cingular • The real motive was AT&T’s customers • Each AT&T customer was worth $1,860 to Cingular

  5. Do You Have Any Unprofitable Customers? • bottom 20 percent of a company’s customers account for losses of up to 75 percent of total profits • cost of customer acquisition is much more expensive than the cost of selling to the existing base. • Classify customers based on key metrics such as • Needs, profitability, cost to serve, buying trends, and strategic value

  6. AGF – Investment Management Company • Facing a mature market, not much room for growth • Used analytics to find that • 29% of customers were responsible for all asset growth • Yet, only 50% of them were receiving adequate support • Was able to design programs that used resources more appropriately

  7. Knowing the customer • Use CRM tools to develop metrics • Classify customers into groups

  8. Customer portfolio

  9. What next? • Profit laggards – Identify cause of nonprofitability and control costs • Revenue laggards – Valuable opportunity to readjust packaging and positioning of products • Unprofitable customers • What makes them unprofitable? • Any Plan of Action to make them profitable

  10. What to do with them?

  11. More specific suggestions

  12. Peoplesoft • PeopleSoft’s CRM 8.9 supports customer portfolio management

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