ABSTRACT
This chapter discusses the basic disciplines that can be useful during Customer Portfolio Management (CPM). These include market segmentation, sales forecasting, activity-based costing (ABC), customer lifetime value estimation and data mining. Market segmentation is increasingly being transformed by information technology, particularly in consumer markets. Customer lifetime value estimation models evaluate a customer's future worth to a company, and data mining techniques are particularly useful for detecting patterns and relationships within historic customer data. Activity-based costing enables companies to understand the costs of marketing, selling and servicing customers and, consequently, customer profitability. CPM is an essential component of strategic Customer Relationship Management (CRM). The CPM process tends to differ from business-to-consumer to business-to-business contexts. The chapter explains how to use a number of business-to-business portfolio analysis tools. It also discusses the core customer management strategies that can be applied selectively across the customer portfolio.
