Defining Customer Boundaries: The First Steps In Customer Portfolio Management

In this paper we focus on the relationships between a supplier and its customers through an analysis of customer portfolio methods. Indeed, several methods of customer portfolio management have been proposed in the literature for fifteen years. These methods present some strong similarities, namely the choice of two distinct dimensions, choice of different criteria qualifying those dimensions, and use of a matrix representation. But, one of the problems when using these methods, remains the choice of the relevant customer unit boundary to be taken into account. In the case of industrial groups with complex decision making process, the definition of the relevant unit of analysis is not obvious. This complexity makes it difficult to undertake a customer portfolio analysis. Indeed, on which entity (or customer level) must the analysis be carried out ? For instance, organizational complexity often means a geographical multi-location ; in this case which "part" of the customer must we consider to build up the customer portfolio" ? Is it the central level (e.g. the headquarters) ? Is it the whole set of sites ? Is it only part of these sites ? Three firm cases are presented. They lead us to highlight that the characteristics of the buying decision process in the customer organization and the characteristics of the supplier organization both influence the delimitation of the customer unit boundary. Finally we make an attempt to include the definition of customer unit boundary within existing customer portfolio methods.