Customer Recalibration Amidst An Economic Crisis

May 14, 2020



The COVID-19 pandemic and subsequent economic crisis have caused companies to radically shift both their short-term operations and long-term planning. Businesses that have built strong customer data capabilities are evaluating their existing measurement frameworks and grappling with how to best leverage them in the midst of economic upheaval. Previously stable aspects of your customer base may now be shifting significantly.

Your customer portfolio is the casting of 100% of your revenue through the lens of you customer segments or groupings. It enables you to answer questions like “who are our best customers, and how do they interact with us?,” “what levers should we pull to cultivate relationships with our brand advocates?,” and “which of our lapsed customers are most likely to reengage?” Recognizing that you have distinct groups of customers with differing abilities to spend, degrees and channels of engagement, and preferences for how and why they transact with you, and adjusting your approach accordingly, is more critical than ever before.

While it may seem logical to redefine your customer portfolio based on shifting customer behaviors, doing so would be premature. A more effective strategy includes asking new questions using your existing customer portfolio definitions and making precise adjustments only when you are confident that a change you are observing will persist.

The sooner that executives can begin to ask questions like the ones outlined below and track changes throughout the remainder of the crisis, the more effective their short- and long-term customer portfolio management practice will be.



P&Ls broken out by geography, product line, or channel have been a staple of modern business management for centuries, but few have supplemented their performance tracking with a true customer P&L that ascribes revenue and profit to distinct customer groups. This gap has historically handicapped a company’s ability to set and execute a robust customer-centric strategy. Yet, by definition, all revenue comes from customers, and their choices of what, where, when, and how to buy shape our financial performance. Filling this gap is more critical than ever as businesses scramble to track day-to-day changes driven by the pandemic, adjusting their activities to maintain and pick up share wherever possible.

Customer portfolio management is the practice of managing a business based on a customer P&L grounded in a deep and rich understanding of your customers. The portfolio is made up of customers assigned to groups (or segments) aligned to their response to your business value proposition. The customer portfolio is intended to help businesses strategically optimize the value of the firm via decisions that optimize the collective value of their customers.

With finite resources to spend—including investments of money, time, and people—companies that make smarter, data-driven decisions about how to allocate those resources will realize a higher return. There are four investment options that can be applied to customer portfolio management:

Elicit has partnered with dozens of companies spanning retail, hospitality, transportation, and healthcare to build custom customer portfolio management practices. While each company’s practice is unique, the capabilities needed are relatively consistent, including, but not limited to identifying customers across purchases and interactions, collecting and integrating available customer data, and creating a structured customer portfolio based on tracked behaviors expressive of value and engagement.

Each capability exists on a maturity spectrum, starting with basic practices and improving over time. While many companies are still in the nascent stages of developing these capabilities, that should not hold you back from beginning core customer portfolio management practices leveraging what you have. Even a simple customer lifecycle can be used to design, deploy, and measure customer interactions as you navigate through market disruptions.



Creating a structured customer portfolio by defining the distinct groups in your customer base enables you to track the health of your business over time from a customer perspective. One simple structure to start with is a lifecycle that includes stages such as introduced, new, active, and lapsed, and it’s likely that you already have one defined. A well-defined lifecycle should capture as close to 100% of your company’s revenue as possible. Establishing KPIs for acquisition, engagement, development, retention, and reactivation, and tracking the performance of those KPIs over time, will tell you if your business is getting relatively healthier or weaker.

Right now, most companies’ customer portfolios are ailing, or at least shifting. Your goal should be to use your customer understanding to guide how you reallocate your finite resources and determine where to invest, divest, sustain, and redistribute in the midst of continuing portfolio changes, and make dynamic adjustments to your investments as economic conditions and business performance shifts and eventually rebounds. Leveraging your existing customer lifecycle definitions, begin by asking the following questions to inform your allocation decisions.


  1. Where is there stability in our active customer base? Consider which customers are still purchasing as they were before, which are purchasing differently than before, which have stopped purchasing but are continuing to demonstrate non-purchase engagement, and which appear to have disengaged entirely. This provides a new framework by which to understand active customer participation and guide your short-term active customer journeys. Comparing these behaviors to prior periods, and continuing to track them for the foreseeable future, will provide factual insight into the level of disruption among your active customers.
  2. How do we define our “best” customers? Traditionally, your best customers are those that spend the most, and are engaged either deeply or broadly with other aspects of your value proposition. While you should continue to maintain relationships with those customers, a different pocket of customers will likely emerge that are taking advantage of available products and services, advocating for your brand on social media and review platforms, and engaging with your communications. These customers should be uniquely recognized and observed as well. Many of the changes in customer engagement that have materialized will stick around, and these customers will provide insight into the performance of various value proposition elements and early indications of rebound.


  1. How are we acquiring new customers today? As long as the pandemic is affecting physical shopping, the importance of digital acquisition will be greater than ever before. You’ve likely already shifted your media spend accordingly, but you should also pay significant attention to commonalities between customers that you are able to acquire right now. Are they coming from specific geographic regions that have been similarly impacted epidemiologically or economically? Are they entering on similar product categories? Are there specific communication messages or channels that are proving more effective? Are there specific campaigns or offers that drive higher conversion? Dimensionalizing as many aspects of your conversion funnel as possible will enable improved acquisition investments and payback.
  2. Should we redefine post-acquisition activation? Driving a second purchase was often the primary goal for new customer journeys. Even though transactions are more critical than ever, many consumers are facing financial hardship or uncertainty, and pushing products can quickly lead to disengagement. Leveraging what you’re observing from your best customers, rethink your new customer journeys to focus more on non-purchase value drivers, like incentivizing profile creation or social media engagement.


  1. Which customers are exhibiting likely-to-lapse behavior? One impact of the drastic changes to purchase and non-purchase patterns is that the metrics and models you’ve used to track likelihood to lapse may not be as effective. It’s important to recognize that some customers will go dormant in the short-term, but that doesn’t mean that they’ve truly stopped doing business with you. For example, a customer that may be off her expected purchase cadence may still be actively browsing your website, or engaging with your social media posts, or simply waiting until she gets back to work. It will be important to come back to this population once your industry begins to rebound. Without changing your definition of a lapsed customer, supplement it with various lenses for tracking active brand engagement.
  2. Is there an opportunity to reengage lapsed customers? For some businesses, marketplace dynamics may actually present an opportunity to reengage lapsed customers. Perhaps their preferred store is closed, or cannot provide a product or service as quickly, conveniently, or cost-effectively as they’d like. Now is a good time to reach out to your lapsed customers and demonstrate why they should reconsider your company. According to a recent report by global research firm Kelton, 71% of consumers would prefer a familiar and comforting brand right now. If you can supplement familiarity with a value proposition designed to support convenience or value, you may be well positioned to recoup lost customers.


  1. Can we track consumers who are engaged with our brand, but haven’t transacted with us? Most companies interact with consumers that have introduced themselves to that company through email, social media engagement, a mobile app download, or product usage without purchase (think an airline traveler whose spouse purchases tickets on his behalf). Because customer IDs are designed primarily to track purchases and behaviors exhibited by purchasing customers, many companies are challenged in their ability to identify non-purchasing customers across platforms. Revisit your company’s approach to identifying and tracking introduced customers and ensure that there’s connectivity post-first purchase. Effectively linking and observing the behaviors of these consumers will enable a targeted engagement approach that could result in conversion down the road.
  2. What opportunities exist to drive a transaction or deepen engagement with these customers? Your pool of introduced customers is an often valuable and overlooked population. As a result of the identification gaps described above, many companies don’t have an explicit strategy for cultivating relationships and maximizing conversions with their introduced customers. Developing a strategy for deepening this engagement now—or if nothing else, collecting contact information for these customers so that you can engage with them in the future—will pay off as the marketplace reopens and consumer spending rebounds.

These examples only begin to touch upon the potential of customer portfolio management. Your portfolio can (and should) be much richer than a lifecycle, encompassing patterns of response to your product, price, experience, and marketing. This is undoubtedly a big undertaking for any business, especially challenging in the midst of a global pandemic and economic crisis. It requires deep coordination between your marketing, merchandising, analytics, technology, and finance teams, and often takes years to truly get right.

But there’s never been a more important time to drive customer-based decision making into your business. Beginning the journey can be relatively simple, and companies will reap its benefits immediately. Your products, locations, and channels aren’t changing nearly as rapidly as a result of the economic conditions as your customers are. Keeping a close eye on customer behavior, reflected through a structured customer portfolio, will enable you to more effectively navigate through the challenge, and will leave you well positioned for years of economic recovery.