Customer portfolio and Strategic Account Management 04256 - Essay Example

Arguments made by Johnson and Selnes (2004), states that focus should be made on the wider managerial perspective that considers the company’s entire customer portfolio rather than focusing on the few close customer relationship in order to maintain profitability, shareholder’s value and company growth. According to the authors Harri Terho and Aino Halinen (2007), customer portfolio analysis is an action by which a firm examines the present and the future customer values for building a balanced consumer structure through efficient allocation of resources to individual or customer group.

The equilibrium of the customer portfolio can be considered as the vital goal of the customer portfolio analysis due to its explicit presence in all the proposed. Therefore the portfolio models earlier were based on mathematical optimization and have major focus on the formation of a favourable portfolio of products (Sackmann, Kundisch and Ruch, 2010). Ryals (2003) also stresses on the need to analyse the total relationships as an investment portfolio where the balance would be the consequence of the customer relationship related long term revenues and risks.

The main focus of the customer base is to determine the significance of customer relationships to the company and differentiating between consumers of different worth. The analysis is the future outcome which is not restricted to the monetary value of the customers but also involves the varied consumer roles in providing present and future value for the company (Johnson and Selnes, 2004). The theory of customer portfolio study is related to the theory of segmentation but still varies considerably.

Portfolio analysis centres on analyzing the existing value of customers as stated by H. Terho, A. Halinen in the Journal of Business Research (2007) from the main companys point of view whereas segmentation usually focuses on segregating the market into