Managing customer profitability using portfolio matrices

Ang, Lawrence; Taylor, Ben

doi:10.1057/palgrave.dbm.3240266

Cited by 14 publications

(10 citation statements)

References 4 publications

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“…Further similar customer matrices have been proposed by Kumar (2002), Best (2005), and Ang and Taylor (2005). These authors classify customers along the dimensions profitability and loyalty and recommend certain strategies for each of the four resulting customer groups.…”

Section: Practitioner Guides and Frameworkmentioning

confidence: 93%

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Perceived Fairness of Differential Customer Treatment

Mayser

Wangenheim

2012

Journal of Service Research

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Following the principles of relationship marketing, many service providers treat customers differently based on their profitability. We investigate consumers' fairness perceptions of such differential customer treatment in two major service economies, the United States and Germany. Applying the concept of distributive justice to differential customer treatment, we find that consumers' preference for the principle of equity versus the principle of equality predicts fairness perceptions in both countries. We also find that consumers' reactions to nonpreferred treatment are more intense than their reactions to preferred treatment. That is, results indicate that not only does customers' understanding of distributive justice have an influence, but also the principle of loss aversion comes into play when differential customer treatment is examined from the consumers' perspective. We also investigate differences between U.S. and German consumers and find that U.S. consumers perceive differential customer treatment as less unfair. Though rather critical of differential treatment at large, we also find that German consumers report reacting more positively when preferred. Although fairness is an issue, results overall show that most service providers should not refrain from differential customer treatment. Because, generally, consumers do not seek complete equality and like to be preferred, service providers applying differential treatment need to clearly communicate the equity principle and to make sure to treat their best customers preferred-without treating other customers badly. We also recommend including customers' fairness perceptions as a key performance indicator in firms' market research plans and considering regional adjustments rather than standardized practices when applying differential treatment strategies in different countries.

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Section: Practitioner Guides and Frameworkmentioning

confidence: 93%

“…The most popular customer is, of course, characterized by both high profitability and loyalty. This group is labeled True Friends (Reinartz & Kumar, 2002), Top Performers (Best, 2005), or Stars (Ang & Taylor, 2005). The authors argue that this customer group should be delighted to ensure loyalty.…”

Section: Practitioner Guides and Frameworkmentioning

confidence: 99%

Perceived Fairness of Differential Customer Treatment

Mayser

Wangenheim

2012

Journal of Service Research

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“…According to empirical studies, this results in a higher level of customer satisfaction and loyalty, as well as in more intensive customer relationships (Anderson and Sullivan 1993;Xu et al 2002). Besides a lower price sensitivity of customers and a better exhaustion of cross-selling potential (Ang and Taylor 2005), these effects normally also increase the cash flows of a firm's customers. Consequently, the CE of the firm as well as ΔCE(p) rise accordingly.…”

Section: Optimization Modelmentioning

confidence: 99%

The optimal level of CRM IT investments

et al. 2012

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In light of the growing relevance of customeroriented business strategies IT investments in the field of Customer Relationship Management have increased considerably. However, firms often could not realize sufficient returns on these IT investments. One major reason for this failure seems to be the lack of appropriate approaches to determine the economic impact of such investments ex ante. Therefore, we develop an economic model to determine the optimal level of Customer Relationship Management IT investments. Using this approach, firms can evaluate, to what extent investments in Customer Relationship Management IT are reasonable. One major result is that in most cases the "all or nothing strategy" pursued by many firms does not lead to the optimal level of investments. To illustrate the practical utility and applicability of the approach, we provide a real world example of a German financial services provider.

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“…24 Research shows that customer relationship performance is improved when fi rms have a set of deliberate relationship information processes in place to capture and utilize information from various multi-channel touchpoints as part of a customer-centric management system. 25 A view of customer profi tability is one step further than the notion of retention, in that such information requires proactive measurement of repeat purchases and effectiveness measures for targeted promotional efforts. As CRM technology is central to such a customer-centric approach, relational data should underlie any CRM system.…”

Section: Customer Touchpointsmentioning

confidence: 99%

Building the foundation for customer data quality in CRM systems for financial services firms

Zahay

Peltier²,

Krishen³

2012

J Database Mark Cust Strategy Manag

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others. As a consultant he regularly works with businesses on how to incorporate customer data in the marketing decision process, including new product development, customer-centric strategies and tactics, and marketing communications. ABSTRACT The digital revolution has led to fi rms with massive amounts of information. Thus, the storage, collection and appropriate use of such data is a major challenge for fi rms as they struggle to implement profi table integrated marketing communication strategies. Given this, the goal of our article is to analyze the types of customer-based data that organizations can collect to learn about their customers and determine methods by which the collection of such information can ensure higher data quality for use in Customer Relationship Management (CRM)-based systems. Our work also studies the relative value of each type of data in developing higher quality customer data and superior CRM systems. These data tell managers how to organize their priorities in terms of data learning activities to create the highest quality CRM data so that improved performance can ensue. Our fi ndings show that capturing the results of personalized communications and detailed transactions of customer interactions will yield the highest results and perhaps should be the organization ' s focus.

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Managing customer profitability using portfolio matrices

Cited by 14 publications

References 4 publications

Perceived Fairness of Differential Customer Treatment

Perceived Fairness of Differential Customer Treatment

The optimal level of CRM IT investments

Building the foundation for customer data quality in CRM systems for financial services firms

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