1. bookVolume 2 (2010): Issue 1 (May 2010)
Journal Details
License
Format
Journal
First Published
30 May 2019
Publication timeframe
2 times per year
Languages
English
access type Open Access

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

Published Online: 19 Jul 2014
Page range: 16 - 25
Journal Details
License
Format
Journal
First Published
30 May 2019
Publication timeframe
2 times per year
Languages
English
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

Dhar, Ravi and Rashi Glazer (2003), “Hedging Customers,” Harvard Business Review, 81 (5), pp. 86 - 92. Search in Google Scholar

Homburg, Christian, Sabine Kuester, and Harley Krohmer (2009), “Marketing Management - A Contemporary Perspective,“ London: McGraw-Hill. Search in Google Scholar

Shah, Denish, Roland T. Rust, A. Parasuraman, Richard Staelin, and George S. Day (2006), “The Path to Customer Centricity,” Journal of Service Research, 9 (2), pp. 113 - 124. Search in Google Scholar

Zeithaml, Valarie A., Roland T. Rust, and Katherine N. Lemon (2001), “The Customer Pyramid: Creating and Serving Profitable Customers,” California Management Review, 43 (4), pp. 118 - 142. Search in Google Scholar

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