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Paper info: Companies' customer portfolio management practices and performance in different exchange contexts

Title


Companies' customer portfolio management practices and performance in different exchange contexts

Authors


Harri Terho
Turku School of Economics and Business Administration
Finland
Harri Terho

Place of Publication


The paper was published at the 24th IMP-conference in Uppsala, Sweden in 2008.

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Abstract


Customer portfolio management represents one of the four key relationship management levels in business markets. A large number of customer portfolio models has been suggested and tested since early 1980s. However, there is currently only little knowledge about companies' actual customer portfolio management (CPM) practices and their performance. Moreover, there is currently little knowledge about the role of company context on customer portfolio management. This study examines the relationship between companies' CPM practices and performance in different exchange contexts. Total nine hypotheses are suggested and they are tested by PLS-modeling. The CPM activities are found to be connected to customer profitability and overall customer performance but only with caution directly to firm performance. Different CPM styles are found effective in two examined exchange contexts. Highly designed, mechanistic CPM practices are best suited to market-like exchange contexts where the managerial challenges arise from structural complexity of customer base. In turn, the network-like exchange context favors a less designed, more organic CPM style because of the greater complexity present in customer relationships and interaction. Finally, the results indicate also that different facets of CPM activities are emphasized for attaining performance depending on the context of exchange. Overall, the findings show the importance of tailoring the CPM practices to company's relational context.