All Customers are Equal, but Some are More Equal Should Firms Prioritize their Customers ?

Homburg Christian (), Totzek Dirk () and Droll Mathias ()
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Homburg Christian: Full Professor of Marketing at the Institute for Market-Oriented Management, University of Mannheim, Germany
Totzek Dirk: Research Associate at the Institute for Market-Oriented Management, University of Mannheim, Germany
Droll Mathias: Phoenix Group, Mannheim

NIM Marketing Intelligence Review, 2010, vol. 2, issue 1, 16-25

Abstract: Focusing marketing efforts on the most valuable customers so as to increase company profits is not as straightforward as it seems. There is a downside to customer prioritization such as negative reaction from low priority customers. Taking this into account we still show that prioritizing customers does lead to higher profitability and more return on sales. There are two reasons for this. Firstly, it has a positive effect on the key characteristics of a firm’s relationship with its elite customers while not affecting the lower level. Secondly, it reduces sales and marketing costs. Customer prioritization is more effective and efficient than equal treatment. We also show that firms can rely on six key levers relating to a company’s organizational structure and processes, enabling proper implementation of customer prioritization.

Keywords: Customer Relationship Management; CRM; Sales Management; Profit Management (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:gfkmir:v:2:y:2010:i:1:p:16-25:n:3

DOI: 10.2478/gfkmir-2014-0067

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