1.

0 Introduction

According to Soltani and Navimipour (2016), customer relationship management is the

process and methods of maintaining existing customer relationships by providing superior
customer value and satisfaction with the objectives of boost the business relationships with
customers. Customer relationship management is normally know by public in the form of
point of sales and loyalty program, but actually CRM is more details that. Customer
relationship has been seen as important factor to a business since a century ago, where
businessman wants to keep great relationship with customer to gain future sales and
profitability.

This assignment has few sections to be proceed, which is literature review, customer portfolio
management and its applications. Literature review is the extract the results and findings
based on how we interpret the information in the article. To have a great literature review,
reader must need to understand very well about the journal and use the information provided
accordingly. In the literature review, it should be contain the author, year, findings,
methodology used and objectives.

Furthermore, customer portfolio management is the methods that marketer and research used
to defines the customer on how much they will contribute to the revenue of the company, the
value to the company for each customer. Customer portfolio management consists of 5 tools
which is able to help the company to achieve greater success. First tools is market
segmentation, separate customer into different segment by their characteristic. Second tools is
sales forecast, which is able to predict the future sales of company. Third is activity based
costing, the method is use to calculate the cost of every step of production. Fourth is customer
lifetime value, which is identify through the purchase time of customer in a period. Last tools
is data mining which method used to filter and transform the data into useful information.

As for application of customer portfolio management, I will choose Parkson Malaysia as the
company which I will be study. The company seems to have great segmentation work which
the products variety target most of the consumer in market. Parkson also having loyalty card
in different class such gold, platinum and diamond. Parkson Malaysia is asian based
departmental store which is famous in Malaysia.

I hope to achieve better understanding on customer relationship management. Also I hope my

understanding will be interpret well in the assignment and in the future working environment.
I think I will be more cautious in the future interaction with any customer relationship
management and differentiate their strategy being used.
2.0 Literature Review

2.1 Customer Analytics

David Stodder (2012) conduct research on customer analytics in the era of social media. The
research says that today company implement variety of technologies to analyze and interpret
the customer data. The research using an internet-based survey, and sent invitation to various
professionals and consumers in the particular segment, for 377 candidates being chosen as the
completed survey answers. The objectives of the research are using customer analytics
technologies on the customer data to receive useful information such as customer’s behavior,
purchasing pattern and what method can increase the loyalty of customers towards a brand or
product. The research results shows that customer analytics actually benefits most of the
business functions and operation in a company, such as marketing activities, sales, customer
services, and advertising. As a result, customer analytics and Intelligence being describe in
three perspectives, which is big data analytics, integrated data-warehousing, and business
applications.

Cameron (2013) introduce customer analytics in research as a method that marketers use to
learn more about consumer behaviour. The criteria require is consumer increase their usage of
mobile, where marketers get information on what they search for on the internet, how
frequent and the duration stay on a site. The research purpose is to show the relationship
between mobile marketing and the value of customer analytics. The study says analytics can
get insights of the customer and able to provide personalized offers, which is
called hyper-personal marketing. Furthermore, customer analytics can help the company to
target based on the location, the geographical location of the target customer can be applied
into location-based advertising. In the results, customer analytics is the method that able to
unlock valuable insights into consumers such as interest, usage, preferences, and connections
on the internet.
According to Aryan (2015), customer analytics is very useful to small-medium enterprise, its
being identified that customer analytics is the best method to develop the customer base and
propose useful suggestion to the business. The research is being conducted in India and aim
for the small-medium enterprise, the research is using semi structured interview. The study
says that the smaller the size of company, it allows the increase in interaction with customers.
As a results, the study finds that most of the agents could not conduct customer analytics
properly due to lack of knowledge and experience which causes inaccurate of data.

Jarayam (2015) says that customer analytics method have change with time passing, in the
terms of data collecting method and analytic method. Marketing professional is needed to
engage in new technologies to follow up the pace of technology changing, which can increase
the accuracy of the study and analytics. Most of the company now is emerging the web
analytics, which using the data provided from the social media to transform the data into
meaningful information. The research says that now analytics need to combined with search
engine optimization, and using key performance indicator to design an effective customer
analytics.

2.2 Customer experience

Komulainen and Saraniemi (2019) had conducted a study to understand mobile banking
services and how to improve customer value through the services. The study collecting data
through 14 semi-structured interviews. During analyze, customer experience and value is
being addressed as a person’s internal and perception of services or subjective awareness. The
customer experience is deciding on the services at all times, after, before, and during the
current moment, which every moment during the services is important to the customer. On
the other side, mobile banking services is perceived as a convenience to the users, such as
users are allowed to check on their balance, transaction, loyalty card, and banking in their
own phones. As a result, the company has to understand what creates value for the customers,
also giving a great experience to the customers.

According to Rose et. Al (2010), the research is to reveal the online customer experience on
the interaction to the seller during online purchase. The research being conducted due to the
increase of internet users and online consumers. Review is one of the features that online
seller actually knows about the online customer experience on their purchase, which business
to consumer communication virtually. Organizations need customer experience to identify
whether they need to increase the product offerings in a competitive markets, which cause
customer experience is vital for a organization. For an online shopping website or
applications, functional performance is important for customer to have great experience when
visiting the site. In the results, online customer experience will increasing be influenced by
the interaction made by the technology.

Becker (2018) had conducted a research which aimed to use different methodology to acquire
the information of customer experience, to identify whether the new data collecting method
can contribute to larger view of customer experience. The study mentioned that traditional
method only shows how company related factors to improve the customer experience, which
excluded other factors. From a broader view, the customer experience might get affect by the
external factors which company and researcher must understand these external factor such as
customer activities and other social factors. Researcher has differentiate number of ways to
research such as creation of superior customer experience is the role of services management
and service design focuses on improve the user experience and service dominant logic. As a
results, researcher must not ignore on the consumption and what customer do in their daily
routine to achieve useful data and information.

McColl-Kennedy et al. (2018) says that acquire customer experience insights in important to
an organizations, to understand the post-purchase satisfaction of customer. The positive of the
satisfactions leads to potential loyalty of customer, conversely may giving the insights to the
company to understand what is the roots of the problems. With the problem being discovered,
the company can manage and improve the customer experience. From the research, a
meaningful customer experience is viewed as a must to achieve customer satisfaction and
competitive advantage. The customer experience links the company’s action to the behavior
of customer such as repeat purchase and spread positive word of mouth. Customer reviews on
the company website must being text mining to understand the satisfaction and customer
experience, with the data being found can be assist in improving the customer experience. As
a results, deep insights is need to gain and it should be enable the company have better
understanding of the complexity of customer experience and better ways to manage customer
experience.

2.3 Customer Loyalty

According to Monferrer et al. (2019), customer engagement and customer loyalty is closely
related in banking industry. Banking industry is a complicated industry that consumer know
very little about how the bank function. The research has 225 participant in the questionnaire
and held on Spain. Along the years of banking industry, the companies aimed build positive
relationships with customers and hold their loyalties towards the companies. Customer
engagement in the bank industry is to build trust with the customer since the transactions is
the things that customer care about, with trust as foundation, loyalty of customer can be
secured. The study define that customer loyalty as attitudinal loyalty which the customer’s
attitude towards the company by repeat purchase. Also, the customer loyalty seen as the
consequences of the customer engagement. As the result shown, customer engagement is
positive related to the customer loyalty.

Budianto (2019) says that quality of service is one of the factors that affect customer loyalty.
The research is driven by the increasing of modern market customer, data collecting method
is exploratory survey method in the location of Indonesia. The study is based on the highly
competitive market and the evolve behaviour of consumer which demands lower prices, better
quality and excellent services. Other than that, the research claims that service loyalty is felt
by customer than experience through tangible, emotional is suitable for the statement. The
reason is service loyalty is more depends on the relationship building between the customer
and the company’s services. Intangible issue such as trust and reliability played a major role
in maintain and building customer loyalty. Loyal customer seen as the main account for a
company to achieve long term profitability and reputation. From the results, it shows that
customer loyalty not only being affected by the quality of service, also other factors such as
competitor offerings which means the research is partially positive.

Vu Minh and Huan Huu (2016) conduct a research to examine the relationship of customer
loyalty, quality of services and customer satisfaction. The research is conducted in Vietnam
based on the banking industry and having 261 respondent in the data collecting of
questionnaire. It is difficult for firm to differentiate themselves in an intense competitive
market, the customers now demanding both quantity and quality. Customer satisfaction
strategy shift to customer loyalty strategy can increase the rate of customer retention and
decrease the marketing cost of the firm, which is highly benefits to the company. Customer
satisfaction seen as an essential objective to a company for achieve long term relationship and
profitability. The reason why competitor of banking industry is lesser threats than the
company’s internal weakness due to the switching cost in this industry is high to the customer.
As a results, banking industry should focus on their internal functions to enhance the quality
of service to increase the satisfaction of customer and increase the number of loyal customer.

Gudergan and Feistel (2016) conducted a research to examines the link between customer
loyal and satisfaction, to understand whether both issues is related and directly affected. Also
to examine if other factors may affect the relationship, such as demographic customer
characteristic. Satisfaction of customer is affected the customer loyalty by trust and
commitment in the segment of consumer with high income. As a results, it shows that
customer satisfaction and customer loyalty is positively related, but customer loyalty also may
affect by external factors such as social actors which is friends and family.
3.0 Customer Portfolio Management

According to Thakur and Workman (2016), customer portfolio management concept is to

examine how company can identify the value of customers and segment the customers into
portfolio. Customer Portfolio focus on two issues which is cost to serve and value of customer
to the organization. Customer portfolio is design to differentiate and identify customer types
and the segment of different customers. The segment of customer is being identify by the
company using the product offer that customer interested, so the company can use the right
strategy to approach the particular segment. The concepts of customer portfolio is to increase
the business performance specially on profitability and customer satisfaction.

Market Segmentation is the process of breaking down the market of potential customer into
different groups or segment, based on their characteristic (Trackmaven, 2019). The segment
that have characteristic in common is to ease the marketers on deciding the right strategy to
implement into different segment. Marketing segmentation also helps the company in decides
which segment to target to match the capabilities of the company. With this method,
marketers can reduced the risk of fail marketing activities in the particular segment, which
marketers can be more efficient in implement marketing activities. Furthermore, marketers
also use market segmentation strategy to differentiate the customer to prioritize their target
consumer, which marketers can allocate the resources effectively. Segmentation can increase
the opportunities of company to growth.

Sales forecasting is method and calculation to predict what will happen in the future of
particular time frame, as how the product be sold in a time period at specified price
(Nikhila.C, 2019). Sales forecasting is essential to every company, which company can use
the data to produce the forecast quantities at a right time. That is how every company decide
to buy the raw materials in advance to meets the forecast requirements of quantity. Other than
that, sales forecast enable company to prepare the assets, equipment and manpower to face
the specific conditions. For example, sales forecast shows that company may loss in next year
and the company should hold on their cash-flow to get over the loss period. On the basis of
budget, decision on the budget of advertising and production budget. Sales forecasting also
helps guiding different department of the company such as marketing, production and other
business decision.

According to Kenton (2019), activity based costing is a method that identify indirect and
overhead expenses which related to the products and services. Activity based costing is
mostly adopt by manufacturer such as factories to record and classify the cost during the
production process. The method helps to identify all the activities require to manufacture the
products. An activity driver is also know as cost driver, which is used to refer to an allocation
of resources. Every individual cost of the production is being recorded, the cost is being
classify and total up the cost for produce a specific products. With the statistic shown,
company can pinpoint which process cost the most to the production, company can think of a
better solution to fix the high cost process.
Fontanella (2019) defined customer lifetime value as the indicator that how much revenue can
a single customer contribute to the business in their lifetime. Most business use this metrics to
differentiate different segment that are most important to the company. The longer the
customer purchase from the company, the higher the customer’s life time value. The metrics
is based on the usage rate of a particular product that consumer consume on a weekly,
monthly and annually basis. Although the metrics is able to calculate the customer life time
value, but how to increase it. The ways to increase the lifetime value of customer is increase
the customer’s satisfaction and retention on the customer, which is always update and stay in
communicate with the customer, let them feel special in every way.

Twin (2019) says that data mining is a tools of customer portfolio management that change
raw and meaningless data into useful and understandable information for the company to
make further decisions. With the data being transform, the information can be used by
marketers to develop effective marketing strategies or activities to pursuit the target consumer.
Other than that, data mining also helps the company to reduce cost and increase sales. Data
mining have steps to proceed which is organize and store the data into data warehouse.
Second is manage the data and store it into the company cloud. Third is information
technology experts to interpret the data and transform the data into useful information. Last
steps is change the data format into user friendly format which everybody can understand
such as graph or table.
4.0 Application of Customer Portfolio Management

Every company has their own customer base which is why every company is need to
have their own customer portfolio management. Customer portfolio management is very
important methods to ensure the company running effectively, portfolio helps the company to
understand their customer base better. Its differentiate the customer base and giving the
marketers insights on the customers to giving the right marketing communications and
offerings. Among the tools of customer portfolio management, market segmentation is the
most suitable and easiest to interpret into different customer’s behaviour. Since market
segmentation differentiate different customer into segments with their unique characteristic
such as social class, income, behaviour and location. Parkson Malaysia is a department store
which sells variety of products such as fashion, furniture, kitchen accessories and particular
electronics appliances. Each category of product have many brands. In the marketing
segmentation perspective, Parkson has adopt 2 segmentation variable to differentiate their
customer. The first one is geographical segmentation, which Parkson has two types of
department stores, one is Parkson and another is Parkson Elite. Parkson Elite is target the
segment who have higher income, the products inside the store is mostly branded and luxry
products, on the other side which is Parkson only have normal and common brands which
target the consumer who purchase lower prices of products. Parkson Elite only have in urban
cities such as Bandar Utama and Bukit Bintang. The second segmentation is demographics,
based on age, gender, income and education, Parkson is a department stores that provides
variety of products which means Parkson target all demographics profile in their
segmentation.

From the Single dimension of customer pyramid perspectives (Appendix 1), Parkson is
having loyalty program which provide loyalty for their customers. The loyalty card can be
gained from register at the customer services and its free. The loyalty card has different
classes which is gold, platinum and diamond (Appendix 2). As we can see, gold card is the
basic loyalty card and diamond is the highest rank of loyalty card. In terms of customer
pyramid, customer with purchase value of RM1 to RM4999 is consider as leads and irons
category which is the gold loyalty card of Parkson, although its the lowest among the class of
members, it still having benefits for the customer such as saving points and redemption when
achieve certain points. In the gold stage of customer pyramid, Parkson differentiate the
customer with purchase value at least RM 5000, which the customer is capable to upgrade
their loyalty card from gold into platinum Parkson card. Lastly, platinum stage of customer
pyramid will be need purchase value of RM10000 to upgrade their membership in Parkson.
The highest class of loyalty card is diamond category, this segments is seen as the most
profitable and high priority among the memberships. Even there is classification among the
memberships, Parkson has variety of products that target almost every segment in the market.

Every class of loyalty cards have their own privileges, such as enjoy discounts for
selected brands, birthday of memberships will get a RM50 discount voucher, and exclusive
rewards which is rebates. This is where Parkson will use different strategy on different
memberships. For example, gold card members can redeem RM10 and RM60 of discount
vouchers with the exchange of 1,000 and 3,000 points. Next is platinum members, which they
have more redemption than the gold card members which is RM10, RM60 and RM150 with
only 5,000 points. Last one is diamond card members, which can redeem RM400 discount
vouchers with 10,000 of points. This make the difference among the class of the members,
higher member have more vouchers and discounts. This method makes the gold and platinum
to purchase more to achieve higher membership to gain more benefits. In the customer
pyramid terms, different stage of customer may want to climb up to a higher position in the
pyramid for gain more benefits, in exchange of purchase more from Parkson.

5.0 Conclusion
From this assignment, I have discovered a more in-depth understanding on customer
relationship management which the quality of services will directly affect the customer
loyalty and their experience. Other than that, customer analytics is another important factors
for a company to succeed by understanding on their customers. A company with well
customer relationship management can achieve long term profitability, positive customer
attitudes towards the brands and reduce the cost of marketing activities.

From the article and journal that I have been through, I found that almost every company is
having the problem on how to differentiate themselves in the competitive markets, since the
products offering can be easily being copy by competitor. What I think was important to
customer is the services, the attitude of the company’s personnel which decides the customer
satisfaction on the brands. Customer analytics is important to company due to company need
to understand their customer very well to giving the best performance. As for customer
experience, which is also important due to experience of customer will decides their future
purchase on the company such as repeat purchase. Lastly, customer loyalty is also important
to the company which loyalty of customer may increase the customer base of company by
spreading positive word of mouth.

Furthermore, I think that Customer Portfolio Management is vital to every company because,
CPM can provide better understanding to the company about customers profile and their
behaviour. I now have understand the 5 tools of Customer Portfolio Management which is
market segmentation, data mining, customer lifetime value, activity based cost and sales
forecast. These tools is bringing the portfolio to a more details, accurate and useful
information for the company.

Lastly, the challenges in the applications is that hard to look for information and examples,
also the interpretation takes time and effort. I found that loyalty programs of most of the
company is using the same method and it is very competitive and difficult to present
themselves in the intense competition market.
Appendices

Appendix 1

Appendix 2
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