HomeBUSINESSPortfolio Analysis: Customer, Product, And Sales

Portfolio Analysis: Customer, Product, And Sales

In most companies, to ensure everything is managed in the best possible way, we often talk about portfolio analysis, but what exactly is it? Here we will broadly explain all the study and attention behind it. 

Portfolio analysis is a procedure used in management to clarify which businesses the company should invest in, which ones it is not worthwhile, and, above all, the number of investments necessary to minimize the risk of loss. This practice’s ultimate goal is to highlight all those activities to make the company grow, clarify the weak points and move in this enormous labyrinth called the “economic market.”

Customer Portfolio Analysis

Having clarified the concept of a portfolio, the time has come to explain the importance of having an extremely structured customer portfolio, obtaining a clear and valuable periodic overview for the company’s management. Through this customer portfolio, it will be possible to obtain feedback on sales and study a future strategy, constantly changing, to increase it. A well-structured customer portfolio allows us to know the type of customers who rely on our services, trying to divide them into:

  1. New;
  2. Complexes;
  3. With greater profit;
  4. Recurring;
  5. Worthless.

To structure a good customer portfolio, it is first necessary to calculate the percentage of incidence between customers and the total of products sold. This way, the exact point of where the company is located will be apparent, allowing you to test new alternatives to increase sales among interested users.

In these cases, it is essential to implement a qualitative and non-quantitative analysis, trying to understand the various situations and developing commercial strategies based on a numerical value and with a greater understanding of the available data. To obtain a good customer portfolio and gather data useful for your strategies from the information collected, it is necessary to structure the information in the most schematic and structured way possible, obtaining:

  1. Where the customer is: to better understand the areas where your services seem to be most in demand;
  2. Type of sale: clarify which sales method is used most in a given area;
  3. Type of products purchased by the customer: it is a type of information which, like all the others, better outlines the user’s preferences and, therefore,   future commercial choices;
  4. Customer typology: as we have underlined above, clearly outlining who is the one who requests our services and in what way it happens is of fundamental importance to give the correct value, considering the context in which the study of data moves;
  5. Commercial network analysis.

In a good customer portfolio analysis, it is good to attribute greater importance to profit rather than turnover, as one might erroneously assume. The tools used to obtain a good customer portfolio are many; in addition to a “hierarchical” graph, it is possible to use valuable tools such as the application of the Lorenz curve (i.e., the level of concentration obtained by customers concerning our product and its mode of presentation) and the Pareto theory, used for Problem Solving in business economics, analysis of turnover, profit and for the management of human resources.

Product Portfolio Analysis

The marketing activity of every company must, before each subsequent step,   create an excellent product portfolio. But what exactly does that mean? If a company wants to start and continue its business in the best possible way, after having fully understood the type of customers it wants to attract, how it intends to obtain them, and, above all, what precisely that type of customer wants, then, only after having clarified all this, he will have to take care of creating the product or service that he wants to offer.

The Product portfolio is nothing more than the set of all the products offered by the company to satisfy the needs of its customer. These products/services create the so-called product line, which, within it, can be different from the common purpose of satisfying a specific request. “Same, need different products.”

Having clarified this, it is good to know that a company usually does not have a single product portfolio but represents several; here, we return to the initial concept where we spoke of the study of data to understand better how much and where to invest. The product portfolio of each company essentially has four different types of products :

  1. Successful products: also called “star” products, they represent all those that guarantee excellent profitability, often require significant investments in financial means, and may not represent a real liquid income for the entrepreneur.
  2. Income products: also called cash cows, usually guarantee the entrepreneur constant financial flows over time. This money is typically used to cover some costs of the business.
  3. Marginal products: also called dogs, are generally produced with relatively low volumes and usually do not generate growth or losses for the company.
  4. Risky products, also called question marks, are mainly new products that have recently entered the market and require high financial costs for the company. These products represent the company’s demand/risk.

In conclusion, for an entrepreneur and his own company, it is of fundamental importance to have an excellent quantity of all this data through customer, product, and sales analyses, so that the necessary interventions can be made to improve turnover and the same corporate survival, also managing to improve the same sales policies.

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