Customer asset management in action: using customers portfolio for allocating resources across business-to-business relationships for improved shareholder value

Suvi Nenonen Customer asset management in action: using customer portfolios for allocating resources across business-to-business relationships for improved shareholder value Customers are crucial assets to all firms as customers are the ultimate source of all cash flows. Regardless this financial importance of customer relationships, for decades there has been a lack of suitable frameworks explaining how customer relationships contribute to the firm financial performance and how this contribution can be actively managed. In order to facilitate a better understanding of the customer asset, contemporary marketing has investigated the use of financial theories and asset management practices in the customer relationship context. Building on this, marketing academics have promoted the customer lifetime value concept as a solution for valuating and managing customer relationships for optimal financial outcomes. However, the empirical investigation of customer asset management lags behind the conceptual development steps taken. Additionally, the practitioners have not embraced the use of customer lifetime value in guiding managerial decisions - especially in the business-to-business context. The thesis points out that there are fundamental differences between customer relationships and investment instruments as investment targets, effectively eliminating the possibility to use financial theories in a customer relationships context or to optimize the customer base as a single investment portfolio. As an alternative, the thesis proposes the use of customer portfolio approach for allocating resources across the customer base for improved shareholder value. In the customer portfolio approach, the customer base of a firm is divided into multiple portfolios based on customer relationships’ potential to contribute to the shareholder value creation. After this, customer management concepts are tailored to each customer portfolio, designed to improve the shareholder value in their own respect. Therefore, effective customer asset management with the customer portfolio approach necessitates that firms are able to manage multiple parallel customer management concepts, or business models, simultaneously. The thesis is one of the first empirical studies on customer asset management, bringing empirical evidence from multiple business-to-business case studies on how customer portfolio models can be formed, how customer portfolios can be managed, and how customer asset management has contributed to the firm financial performance.

Fading Customer Relationships

This dissertation is based on the assumption that fading customer relationships are important phenomena to understand in order for companies to prevent a future relationship termination, manage a desired relationship termination, or manage the situation where the relationship strength temporarily or permanently has weakened but where the customer still stays with the same service provider. It is assumed that fading could take different forms and develop through a range of different processes. The purpose of the thesis is therefore to define and describe fading, reveal different types of fading relationship processes, and discuss the dynamics of these processes. In services literature there is a lack of research focusing on the weakening of customer relationships. Fading therefore represents a new approach to understanding issues related to the ending of customer relationships. A fading relationship process could precede a relationship ending, but could also represent a temporal weakening of the relationship without leading to termination. It thus distinguishes the concept from other concepts within ending research which focus solely on relationships that have been terminated, taking a larger aspect of the relationship into account (as a relationship could build on constant changes). A pilot study created an understanding of difficulties related to understanding and detecting fading customer relationship, which led to a follow-up study incorporating qualitative interviews in relationship dyads characterised as fading with both private banking customers and their respective financial advisor. The focus remained on the understanding of the fading process resulting in a model for analysing different types of fading processes. Four types of fading processes were also revealed; the crash landing process, the altitude drop process, the fizzle out process and the try out process. The dissertation contributes to a broadened understanding of different types of fading processes within the research area of ending relationships emphasising the dynamic aspects of the phenomenon. Managerial implications include the management of different types of fading processes and also the understanding of the financial advisor’s role in influencing the development of these processes. Helena Åkerlund is associated with CERS, the Centre for Relationship Marketing and Service Management at Hanken, Swedish School of Economics and Business Administration, Helsinki

Customer asset management in action: using customers portfolio for allocating resources across business-to-business relationships for improved shareholder value

Suvi Nenonen Customer asset management in action: using customer portfolios for allocating resources across business-to-business relationships for improved shareholder value Customers are crucial assets to all firms as customers are the ultimate source of all cash flows. Regardless this financial importance of customer relationships, for decades there has been a lack of suitable frameworks explaining how customer relationships contribute to the firm financial performance and how this contribution can be actively managed. In order to facilitate a better understanding of the customer asset, contemporary marketing has investigated the use of financial theories and asset management practices in the customer relationship context. Building on this, marketing academics have promoted the customer lifetime value concept as a solution for valuating and managing customer relationships for optimal financial outcomes. However, the empirical investigation of customer asset management lags behind the conceptual development steps taken. Additionally, the practitioners have not embraced the use of customer lifetime value in guiding managerial decisions - especially in the business-to-business context. The thesis points out that there are fundamental differences between customer relationships and investment instruments as investment targets, effectively eliminating the possibility to use financial theories in a customer relationships context or to optimize the customer base as a single investment portfolio. As an alternative, the thesis proposes the use of customer portfolio approach for allocating resources across the customer base for improved shareholder value. In the customer portfolio approach, the customer base of a firm is divided into multiple portfolios based on customer relationships’ potential to contribute to the shareholder value creation. After this, customer management concepts are tailored to each customer portfolio, designed to improve the shareholder value in their own respect. Therefore, effective customer asset management with the customer portfolio approach necessitates that firms are able to manage multiple parallel customer management concepts, or business models, simultaneously. The thesis is one of the first empirical studies on customer asset management, bringing empirical evidence from multiple business-to-business case studies on how customer portfolio models can be formed, how customer portfolios can be managed, and how customer asset management has contributed to the firm financial performance.

The Nature and Change of Bonds in Industrial Business Relationships

A focus on cooperative industrial business relationships has become increasingly important in studies of industrial relationships. If the relationships between companies are strong it is usually a sign that companies will cooperate for a longer time and that may affect companies’ competitive and financial strength positively. As a result the bonds between companies become more important. This is due to the fact that bonds are building blocks of relationships and thus affect the stability in the cooperation between companies. Bond strength affect relationship strength. A framework regarding how bonds develop and change in an industrial business relationship has been developed in the study. Episodes affect the bonds in the relationship strengthening or weakening the bonds in the relationship or preserving status quo. Routine or critical episodes may lead to the strengthening or weakening of bonds as well as the preservation of status quo. The method used for analyzing bond strength trying to grasp the nature and change of bonds was invented by systematically following the elements of the definitions of bonds. A system with tables was drawn up in order to find out if the bond was weak, of medium strength or strong. Bonds are important regulators of industrial business relationships. By influencing the bonds one may have possibilities to strengthen or weaken the business relationship. Strengthen the business relationship in order to increase business and revenue and weaken the relationship in order to terminate business where the revenue is low or where there may be other problems in the relationship. By measuring the strength of different bonds it can be possible to strengthen weak bonds in order to strengthen the relationship. By using bond management it is possible to strategically strengthen or weaken the bonds between the cooperating companies in order to strengthen the cooperation and tie the customer or supplier to the company or weaken the cooperation in order to terminate the relationship. The instrument for the management of bonds is to use the created bond audit in order to know which bonds resources should be focused on in order to increase or decrease their strength.

Customer Energy in Relationships

All companies have a portfolio of customer relationships. From a managerial standpoint the value of these customer relationships is a key issue. The aim of the paper is to introduce a conceptual framework for customers’ energy towards a service provider. Customer energy is defined as the cognitive, affective and behavioural effort a customer puts into the purchase of an offering. It is based on two dimensions: life theme involvement and relationship commitment. Data from a survey study of 425 customers of an online gambling site was combined with data about their individual purchases and activity. Analysis showed that involvement and commitment influence both customer behaviour and attitudes. Customer involvement was found to be strongly related to overall spending within a consumption area, whereas relationship commitment is a better predictor of the amount of money spent at a particular company. Dividing the customers into four different involvement / commitment segments revealed differences in churn rates, word-of-mouth, brand attitude, switching propensity and the use of the service for socializing. The framework provides a tool for customer management by revealing differences in fundamental drivers of customer behaviour resulting in completely new customer portfolios. Knowledge of customer energy allows companies to manage their communication and offering development better and provides insight into the risk of losing a customer.

Key Account Management and Quality in Business-to-Business Relationships

What are the main elements of successful Key Account Management (KAM)? What is the nature of quality for the company and for the individual in business-to-business relationships? What kind of managerial practices are required at the company and individual level in Key Account Management? This paper focuses on these central aspects of KAM. It describes the main elements of KAM, which is a systematic marketing management approach in the business-to-business context with the objective to build profitable and long-lasting relationships with major accounts. Although paying customers in the business-to-business market are organizations, they are always represented by individuals. Thus, successful KAM requires appropriate handling of both the organizational and the individual levels. This paper describes the nature of quality for the company and for the individual in business-to-business relationships. As a synthesis, this paper suggests a framework for KAM practices deploying the main elements of KAM and the company and individual levels of business-to-business relationships. The weakness of the traditional quality management approach is that it pays little, if any, attention to customer importance. By providing similar quality to each customer, more important customers are penalized and less important customers are rewarded. This paper broadens the traditional quality management approach by introducing the concept of targeted quality based on customer importance.

Critical Incidents in Internal Relationships

Critical incidents have had an important role in service quality and service management research. The focus of critical-incident studies has gradually shifted from separate acts and episodes towards relationships, and even switching from one relationship to another. The Critical Incident Technique has mainly been used when studying the service sector, concentrating on the customer's perception of critical incidents. Although some studies have considered the perceptions of employees important, critical incidents have not been considered a tool for studying internal relationships to any larger extent. This paper takes a process approach and shifts the focus from an external to an internal setting. It puts forward a new technique for analysing internal relationships from a critical-incident perspective. The technique captures the dynamism in relationships through considering internal critical incidents as micro-processes affecting not only internal but also external relationships.

A systems perspective of host-pathogen interactions: predicting disease outcome in tuberculosis

The complex web of interactions between the host immune system and the pathogen determines the outcome of any infection. A computational model of this interaction network, which encodes complex interplay among host and bacterial components, forms a useful basis for improving the understanding of pathogenesis, in filling knowledge gaps and consequently to identify strategies to counter the disease. We have built an extensive model of the Mycobacterium tuberculosis host-pathogen interactome, consisting of 75 nodes corresponding to host and pathogen molecules, cells, cellular states or processes. Vaccination effects, clearance efficiencies due to drugs and growth rates have also been encoded in the model. The system is modelled as a Boolean network. Virtual deletion experiments, multiple parameter scans and analysis of the system's response to perturbations, indicate that disabling processes such as phagocytosis and phagolysosome fusion or cytokines such as TNF-alpha and IFN-gamma, greatly impaired bacterial clearance, while removing cytokines such as IL-10 alongside bacterial defence proteins such as SapM greatly favour clearance. Simulations indicate a high propensity of the pathogen to persist under different conditions.

A hitchhiker's guide to a crowded syconium: how do fig nematodes find the right ride?

P>1Organisms with low mobility, living within ephemeral environments,need to find vehicles that can disperse them reliably to new environments. The requirement for specificity in this passenger-vehicle relationship is enhanced within a tritrophic interaction when the environment of passenger and vehicle is provided by a third organism. Such relationships pose many interesting questions about specificity within a tritrophic framework. 2. Central to understanding how these tritrophic systems have evolved, is knowing how they function now. Determining the proximal cues and sensory modalities used by passengers to find vehicles and to discriminate between reliable and non-reliable vehicles is, therefore, essential to this investigation. 3. The ancient, co-evolved and highly species-specific nursery pollination mutualism between figs and fig wasps is host to species-specific plant-parasitic nematodes which use fig wasps to travel between figs. Since individual globular fig inflorescences, i.e. syconia, serve as incubators for hundreds of developing pollinating and parasitic wasps, a dispersal-stage nematode within such a chemically,complex and physically crowded environment is faced with the dilemma of choosing the right vehicle for dispersal into a new fig. Such a system therefore affords excellent opportunities to investigate mechanisms that contribute to the evolution of specificity between the passenger and the vehicle. 4. In this study of fig-wasp-nematode tritrophic interactions in Ficus racemosa within which seven wasp species can breed, we demonstrate using two-choice as well as cafeteria assays that plant-parasitic nematodes (Schistonchus racemosa) do not hitch rides randomly on available eclosing wasps within the fig syconium, but are specifically attracted, at close range, i.e. 3 mm distance, to only that vehicle which can quickly, within a few hours, reliably transfer it to another fig. This vehicle is the female pollinating wasp. Male wasps and female parasitic wasps are inappropriate vehicles since the former are wingless and die within the fig, while the latter never enter another fig. Nematodes distinguished between female pollinating wasps and other female parasitic wasps using volatiles and cuticular hydrocarbons. Nematodes could not distinguish between cuticular hydrocarbons of male and female pollinators but used other cues, such as volatiles, at close range, to find female pollinating wasps with which they have probably had a long history of chemical adaptation. 5. This study opens up new questions and hypotheses about the evolution and maintenance of specificity in fig-wasp-nematode tritrophic interactions.

Change in spectrum of Brownian fluctuations of optically trapped red blood cells due to malarial infection

We study the properties of single red blood cells (RBCs) held in an optical-tweezers trap. We observe a change in the spectrum of Brownian fluctuations between RBCs from normal and malaria-infected samples. The change, caused by infection-induced structural changes in the cell, appears as a statistical increase in the mean (by 25%) and standard deviation (by 200%) of the corner frequency measured over similar to 100 cells. The increase is observed even though the ensemble of cells being measured consists mostly of cells that do not actually host the parasite, but are from an infected pool. This bystander effect appears to vindicate other observations that infected cells can affect the biomechanical properties of uninfected cells. The change is also observed to be independent of the stage of infection and its duration, highlighting its potential for disease detection. (C) 2010 Society of Photo-Optical Instrumentation Engineers. [DOI: 10.1117/1.3427142].

Changes in the Levels of Free Amino Acids in Various Regions of Cuscuta during Growth

The angiospermous plant parasite Cuscuta derives reduced carbon and nitrogen compounds primarily from its host. Free amino acids along Cuscuta vines in three zones, viz., 0 to 5 cm, 5 to 15 cm, and 15 to 30 cm, which in a broad sense represent the region of cell division, cell elongation and differentiation and vascular tissue differentiation respectively, were quantitatively estimated. The free amino acid content was the highest in the 0 to 5 cm region and progressively decreased along the posterior regions of the vine. The haustorial region showed the lowest content of free amino acids. In general, the free amino acid content in samples collected at 7 p.m. was found to be higher than that in the samples collected at 7 a.m. Three basic amino acids, histidine, the uncommon amino acid γ-hydroxyarginine, and arginine constituted more than 50% of the total free amino acids in all the zones studied except the haustorial region. Aspartic acid and glutamic acid constituted the major portion in the acidic and neutral fraction of amino acids. Glutamine, asparagine, threonine, and serine were eluted together and occurred in substantial amounts. γ-Hydroxyarginine constituted the largest fraction in the cut end exudate of Cuscuta and presumably appeared to be the major form of transport amino acid. γ-Hydroxyarginine was also a major constituent of the basic amino acids in Cuscuta vines parasitizing host plants from widely separated families, suggesting that this amino acid is a biosynthetic product of the parasite rather than that of the hosts. Also, U-14C arginine was converted to γ-hydroxyarginine by cut Cuscuta vines, suggesting that γ-hydroxyarginine is synthesized de novo from arginine by Cuscuta.

Using Water as a Design Element in Crystal Engineering. Host-Guest Compounds of Hydrated 3,5-Dihydroxybenzoic Acid

Thirteen host guest compounds of 3,5-dihydroxybenzoic acid (DHBA) have been structurally characterized. Water molecules occupy the peripheries of a hexagonal void, created with DHBA molecules, and act as ``hooks'' to connect the guest molecules with the host-framework via hydrogen bonding. The ``water hook'' is an OH group acting as a donor. Consequently, the guest molecules were chosen so that they contain good hydrogen bond acceptor functionalities. A number of multicomponent hydrates were isolated with stoichiometries (DHBA)(x)(H2O). (guest),. Of these, compounds with the following as guests were obtained as crystals that were good enough for single crystal work: ethyl acetate (EtOAc), diethyl oxalate, dimethyl oxalate, di(n-propyl) oxalate, diethyl malonate, diethyl succinate, chloroacetonitrile, N,N-dimethyl formamide (DMF), acetone, dimethyl sulfoxide (DMSO), 1-propanol, and 2-butanol. From 2-butanol, a hemihydrate, (DHBA)(2)(H2O), was also obtained concomitantly. Further to guest stabilization, water acts as a good mediator of effective crystal packing and also determines the topology of the host framework. En the present series of compounds, the role of water is wide ranging, and it is not easy to classify it specifically as a host or as a guest.

Oxidative activities in mitochondria-like particles from Setaria digitata, a filarial parasite

The oxidative metabolic potential of Setaria digitata, a filarial parasite found in the intraperitoneal cavity of cattle, was investigated. These worms showed active wriggling movements which were not affected by respiratory poisons such as cyanide, rotenone and malonate. They also possessed cyanide-insensitive and glucose-independent oxygen consumption pathways. By differential centrifugation of sucrose homogenates, a fraction containing mitochondria-like particles was obtained in which the activity of the marker enzyme, succinate dehydrogenase, was recovered. This fraction catalysed succinate- and NADH-dependent reduction of both cytochrome c and dyes. Oxygen uptake found with succinate, NADH and ascorbate as substrates was not sensitive to cyanide. Cytochromes could not be detected in either this fraction or homogenates of the worms. H2O2 generation with a number of substrates and lipid peroxidation by measuring malondialdehyde formed as well as by accompanying oxygen uptake were demonstrated in the mitochondria-like particles. A lipid quinone, possibly with a short side chain and related to ubiquinone, was detected in the worms. The results suggested the existence of two cyanide-insensitive oxygen-consuming reactions in Setaria: one respiratory substrate-independent lipid peroxidation, and a second substrate-dependent reaction that requires an auto-oxidizable quinone but not a cytochrome system.