CUSTOMER PROFITABILITY

MARKETING

• SUBMITTED TO – Dr DEEPAK • SUBMITTED BY –

KAUSHAL DEEPANSHU DIMRI
 CUSTOMER PROFITABILITY

Customer profitability is defined as the profit earned by the organization

by serving the customers over a specified period of time.
Customer product profitability analysis
CUSTOMER PROFITABILTY ANALYSIS
Customers are arrayed along the columns and products along the rows. Each cell
contains a symbol for the profitability of selling that products to that customer.
Customer1 is very profitable : he buys three profit making products(P1,P2,and P4).
Customer 2 yields a picture of mixed profitability :he buys one profitable product and
one unprofitable product. Customer 3 is a losing customer because he buys one
profitable product and two unprofitable products. What can the company do about
customers 2 and 3?
1) It can raise the price of its less profitable products or eliminate them , or
2) It can try to sell them its profit making products.
Knowing customer profitability

1. Accurately measure the true cost of servicing customers

2. Catch areas of operational inefficiency
3. Identify ways to serve customers better and improve their experience
4. Pinpoint the target customer group you want to attract, retain and
grow
5. Identify customers you want to hang on to, even if at a greater cost
6. Make more informed decisions about developing your customer
portfolio
 Benefit of customer profitability analysis

1. Identify the most profitable customers

2. Develop marketing strategies
3. Level of service or onward charging to customer
4. Understanding the financial boundaries in negotiations
5. Financial impact of changes to the customer mix
6. Product development for profitable customer
BEST WORST
CUSTOMERS CUSTOMER
 Costs to serve
1. Those costs that are directly related to the providing the customer or
service to a specific customer
2. Discounts
3. Sales visits
4. Financing outstanding receivables
 Forms of customer profitability
1. Customer profitability
2. Customer segment profitability
- online v in store
- Personal v corporate
- Demographic groups –student v senior citizens
3. Lifetime customer profitability
4. Customer as assets or economic value of customers
THANK
YOU