Phuong is a customer of PVL Ltd. She consistently orders low-margin products, but requires costly services from PVL. In employing ABM techniques to manage customer profitability, PVL's staff should
A) Make no changes in service to Phuong
B) Develop creative approaches to managing Phuong as a customer
C) Require Phuong to pay for all orders in cash
D) Classify Phuong as a value-added customer and increase the amount of services provided to her

Question

Quizplus · Accepted Answer

It is important for PVL's staff to develop creative approaches to managing Phuong as a customer. This could include finding ways to reduce the cost of services provided to her or offering her alternative services that are less costly to provide. It may also be possible to renegotiate pricing with Phuong or explore opportunities to cross-sell higher margin products to her. Simply ignoring Phuong or requiring her to pay for all orders in cash may ultimately result in the loss of her business, which could have negative implications for PVL's overall profitability. Classifying Phuong as a value-added customer and increasing the amount of services provided to her may not be appropriate given the low-margin nature of her orders.

Phuong Is a Customer of PVL Ltd