Customer portfolio analysis using the SOM | Zendy

Annika H. Holmbom | Zendy; Tomas Eklund | Zendy; Barbro Back | Zendy

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Customer portfolio analysis using the SOM

Author(s) -

Annika H. Holmbom,

Tomas Eklund,

Barbro Back

Publication year - 2011

Publication title -

international journal of business information systems

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 0.26

H-Index - 26

eISSN - 1746-0980

pISSN - 1746-0972

DOI - 10.1504/ijbis.2011.042397

Subject(s) - market segmentation , portfolio , profitability index , order (exchange) , customer lifetime value , computer science , customer relationship management , segmentation , process (computing) , business , process management , marketing , knowledge management , customer advocacy , artificial intelligence , finance , service quality , service (business) , operating system

In order to compete for profitable customers, companies are looking to add value using customer relationship management (CRM). One subset of CRM is customer segmentation, which is the process of dividing customers into groups based upon common features or needs. Segmentation methods can be used for customer portfolio analysis (CPA), the process of analysing the profitability of customers. The purpose of this paper is to illustrate how the self-organising map (SOM) can be used for CPA. We segment, identify and analyse a case organisation's profitable and unprofitable customers in order to gain knowledge for the organisation to develop its marketing strategies. The results are validated through cross and face validation. The SOM is able to segment the data in an innovative and reliable way and to provide new insights for decision makers.

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