Customer Portfolio Management The analysis banks used to track profitability was customer portfolio management. It is a technique that has proved useful for many businesses, those dealing with both consumer and business markets. To determine which customers were most valuable, banks had to allocate revenues and costs at the customer level. Although revenues had traditionally been allocated at the customer level (banks always knew who had the most money in their accounts), it was not typical to treat costs in this way. In banks, as in most companies, costs were handled at the product or operations level. By allocating costs to each customer, banks were able to find out which customers were most profitable. It then became easier to devote resources and time to the most profitable customers. While revenues were known to follow an 80/20 law, so that 80% of revenues were generated by 20% of customers, costs can follow a 90/10 law, so 90% of costs are generated by 10% of “whiny” customers.…