Managing the Customer Portfolio to Improve Service and Financial Performance

Few firms consider “whether all of their individually desirable customers are, from the standpoint of risk, desirable collectively” (Dhar and Glazer 2003). Dr. Beth Walker, Arizona State University, and Dr. Crina Tarasi, Central Michigan University, present the findings of two papers that highlight the importance of considering the likely variability of revenue streams produced by customers when thinking about who to target with your marketing segmentation efforts.

Although risk management is central to financial portfolio theory, and occupies much of the thinking of a CFO, in marketing, researchers have given little attention to thinking about risk as it relates to market segmentation and selecting the portfolio of customers that we choose to serve. In this presentation, Dr. Beth Walker and Dr. Crina Tarasi share their research that demonstrates how the fundamental tools of analysis used by professional investors to manage the risk and variability of a stock portfolio can be effectively applied to managing a firm’s portfolio of customers. Borrowing from financial portfolio theory, the research centers on approaches to reducing the variability or risk associated with a firm’s customer portfolio without sacrificing the level of cash flows.

This webcast presentation draws from research papers published in Journal of Marketing and Journal of Service Research:

• Balancing Risk and Return in a Customer Portfolio – Winner of the Maynard Award 2011,Journal of Marketing, 75 (May 2011), 1-17.
• Relationship Characteristics and Cash Flow Variability: Implications for Satisfaction, Loyalty and Customer Portfolio Management – Featured as a “must read for 2013” by Marketing Science Institute academic trustees. —Finalist for the Journal of Service Research Best Article Award for 2013, Journal of Services Research 16 (2, 2013), 121-137.