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Topics and Objectives:
Understanding customer profitability is the foundation of customer relationship management. Intuitive as this seems, it can be downright tricky
to implement in practice.
A major stumbling block for many businesses is the inability to obtain an integrated view of their customers from a data perspective. Legacy systems based on transactional needs of running the business and multiple systems resulting from mergers and acquisitions are just several of the reasons why it can be difficult to ascertain customer profitability.
Required Readings:
Will This Customer Sink Your Stock? Fortune,September 15, 2002.
This business press article which is full of examples of the dangers of not understanding customer profitability, urges businesses to think in
terms of managing a portfolio of customers.
What are Your Customers Worth, Optiimize,May 2002.
A short article by the authors of Managing Customers as Investments - which won the American Marketing Association's Best Book Award in 2006.
Hedging Customers, Harvard Business Review, 2003.
This HBR article applies some fundamental portfolio management concepts from finance to customer portfolios.
Do You Know Who Your Most Profitable Customers Are?, Business Week,
A Business Week article chock-full of examples - if any of you are a Bank of America customer, you may be interested to know that Bank of America
calculates its profits every month on each of its more than 75 million customers - have you contributed your fair share?
Optional Readings:
Using Lifetime Value in Business to Business Marketing
Lifetime Value or Return on Investment: Which is the Better Measure of Success?
Arthur Hughes is a noted expert on strategic database marketing. To go to Authur Hughes Database Marketing Institute's website that contains numerous
white papers, software downloads, and more, click here.
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