abstract
This article uses the customer portfolio management (CPM) approach to examine how a company can define the value of customers and segment these customers into portfolios. By segmenting customers into portfolios, an organization can better understand the relative importance of each customer to the company's total profit. Such an understanding will help companies retain valuable customers create additional value with these customers through relationship development. The purpose of this article is to contribute to the body of customer relationship management (CRM) literature by introducing a conceptual framework of the customer portfolio management (CPM) matrix, which focuses on two issues: (1) cost to serve and (2) value of the customer to the company. From this framework, a firm can segment its customer base into four portfolios, platinum, gold, silver, and bronze, and deliver services accordingly.
