Measuring and Managing Customer Profitability: The Why & How

Gary Cokins, MBA, CPIM, Analytics-Based Performance Management, LLC

The only value a company will ever create for its shareholders is the value that comes from customers – current and those acquired in the future. Customers increasingly view suppliers’ products and standard service-lines as commodities. To remain competitive, companies must determine how to retain customers longer, grow relationships profitably. They must provide differentiated services to different types of customers. These have varying costs. 

Unfortunately most management accounting systems do not report customer profitability. They are restricted to only product and service line profitability reporting. Gain insights into how to shift from being product-centric to being customer-centric. Leveraging business analytics with accurate costs is essential to achieve this result.