CUSTOME PORTFOLIO MANAGEMENT

1. CUSTOME PORTFOLIO MANAGEMENT

2. Customer CRM Value Chain Customer Portfolio Analisis Customer Intimacy Network Development (SCOPE) Value Proposition Development Manage The Customer Life Cycle Profitability Primary Stages Leadership and Culture Data And IT Supporting Conditions People Processes

3. IS THE COLLECTION OF MUTUALLY EXCLUSIVE CUSTOMER GROUPS THAT COMPRISE A BUSINESS’S ENTIRE CUSTOMER BASE CUSTOMER PORTFOLIO

4. Classify customers into different groups that are then managed on a portfolio or collective basis Different customer different service Profit performance Resource effectiveness Customer Portfolio Analysis

5. B market Vs C market Existing Vs Untapped customer Who is The Customer ?

6. Dividing up a Market into more or less homogeneous subsets for which it is possible to create different value proposition Outcome of a segmentation is an identification of the value potentials of each identified segment Market Segmentation

7. Intuitive Brainstorm segmentation variables Age, gender, lifestyle Standard industrial classification (SIC), size, location Produce word-profiles Compute sizes of segments Assess company/segment fit Make targeting decision One/several/all segments? INTUITIVE BASED SEGMENTATION PROCESS

8. Data based Obtain customer data (internal-external) Analyze customer data Identify high/medium/low-value customer segments Profile customers within segments Age, gender, lifestyle Standard industrial classification (SIC), size, location Assess company segment fit Make Targeting Decision One/several/ all segments? DATA BASED SEGMENTATION PROCESSES

9. Identify the business you are in Identify relevant segmentation variables Analyze the market using these variables Asses the value of market segments Select target market(s) to serve Market Segmentation Process

10. From the customer point of view Identify markets and competitors Benefit competitors Product competitors Geographical competitors IDENTIFY THE BUSINESS YOU ARE IN

11. Consumer markets User attributes (demography, geographical, psychographic attributes) Usage attributes (Benefits sought, volume consumed, share of category spend) Business markets SIC Dispersion, size, Account status, Buying process, Buying criteria, propensity to switch, share of customer spend in category, geography, Buying selling IDENTIFY RELEVANT SEGMENTATION VARIABLES AND ANALYZE THE MARKET

12. HOW ATTRACTIVE IS THE OPPORTUNITY ? Size of segment, segment growth rate, price sensitivity of customers, bargaining power of customers, customers’ current relationship with suppliers, barriers to segment entry, barriers to segment exit, number & power of competitors, prospect of new entrants, potential for differentiation, propensity for customer switching HOW WELL PLACED IS THE COMPANY AND ITS NETWORK TO EXPLOIT THE OPPORTUNITY ? Does the opportunity fir the company’s objectives, mission, vision & values? Does the company & its network possess the operational, marketing, technological, people & other competencies, and liquidity to exploit the opportunity? ASSESS THE VALUE IN A MARKET SEGMENT AND SELECT WHICH MARKET TO SERVE

13. Mc Kinsey / General Electric Customer Portfolio Matrix High Attractiveness of market Segment Medium Low Strong Average Weak Fit to company and network competencies Attractive markets Medium priority markets Unattractive markets

14. QUALITATIVE METHODS: Customer surveys Sales team estimates TIME-SERIES METHODS: Moving average Exponential smoothing Time-series decomposition CAUSAL METHODS: Leading indicators Regression models SALES FORECASTING

15. CUSTOMER ACQUISITION COSTS Sales calls, visits, free samples, engineering advice, guarantees TERM OF TRADE Price discounts, advertising & promotion support, slotting allowances (cash paid to retailers for shelf space), extended invoice due dates CUSTOMER SERVIOCE COSTS Handling queries, claims & complaints, demands on sales people & contact center, small order sizes, high order frequency, JIT delivery, part load shipments, breaking bulk for delivery to multiple sites WORKING CAPITAL COSTS Carrying inventory for the customer, cost of credit ACTIVITY BASED COSTING

16. LTV = m ------------------- r 1 + i - r LIFETIME VALUE ESTIMATION LTV = Lifetime value m = margin or profit from a customer per period (e.g.per year) r = retention rate (e.g. 0.8 or 80%) i = discount rate (e.g. 0.12 or 12%)

17. Creation of intelligent from large quantity of data Clustering Decision trees Neural networks Data Mining Defined

18. THE PARETO PRINCIPLE OR 80:20 RULE

19. CUSTOMER PROFITABILITY

20. SHAPIRO et al CUSTOMER CLASSIFICATION MATRIX HIGH RECEIVED PRICE LOW HIGH LOW COST TO SERVE

21. Fiocca’s CPM Model: STEP 1 Key Difficult Non Key Difficult High Difficulty in managing the customer Key Easy Non Key Difficult Low Low High Strategic Importance of the account

22. Fiocca’s CPM Model: STEP2 3 2 1 HOLD THE POSITION H WITHDRAW 6 5 4 Customer’s Business Attractiveness M IMPROVE REALTIONSHIP ATRENGTH 9 8 7 L S M W Relationship Strength

23. SWOT PESTE 5 Forces BCG Matrix ADDITIONAL CPM TOOLS

24. BCG MATRIX

25. HIGH FUTURE LIFETIME VALUE CUSTOMERS HIGH VOLUME CUSTOMERS BENCHMARK CUSTOMERS INSPIRATIONS DOOR OPENERS STRATEGICALLY SIGNIFICANT CUSTOMERS

26. Protect the relationship Re-engineer the relationship Enhance the relationship Harvest the relationship End the relationship Win back the customer Start a relationship Seven core customer management strategies

27. THANK YOU !!!