Rabbia Arshad 12

Saleha Imtiaz 26
Hamna Samad 27
Umar Ashraf 37
Laraib Riaz 38
Muhammad Ahmad 45
Customer and product
profitability analysis
• The ability to evaluate the profitability
to the firm of a specific customer or
group of customers is important
because of the 80-20 rule, 80 percent of
profit usaually come from 20 percent of
a firm’s customers
To maintain competitive advantage

• A company needs to work hard to attract profitable

customers and keep them.
• And it is needs to work equally hard to discourage the
unprofitable customers from continuing to drag down
profits
• Profitable customers can be attracted and kept through
outstanding customer service.
• Unprofitable customers can be discouraged with fewer
discounts and promotional offers.
For example
• An example of customer profitability
information in a bank generating data about the
services being used by each business customers
• Many banks use account analysis to determine
the total fees to charge their business customers
• At the end of each month,or each quarter the
bank prepares an analysis report for each
business customer
Product profitability analysis vs
customer profitability analysis
• Activity base costing ABC is particularly useful
for product profitability analysis.
• When customer and product are being evaluated
for their profitability, accurate allocations of
common costs and shared services are critical
• Customer level or product level operating profits
include only relevent revenues and costs
 Customer Profitability Formula
To calculate CPA, you need the annual profit per customer, and
the total duration a customer stays with your business.
Annual profit = (Total revenue generated by the customer in a
year) – (Total expenses incurred to serve the customer in a year)
when you have the annual profit, the customer profitability
analysis calculation goes like this:
CPA = (Annual profit) x (no. of years customer stays with
company)
Benefits of Customer Profitability Analysis
• Trim out the cost factors
• Marketing to the right segment
• Customized retention strategy
• Enhancing operational efficiency
 Customer profitability analysis
• Segmenting customers
• Revenue Attribution
• Cost attribution
• Analysis – Profit, Less profitable, unprofitable
Develop strategies to maximise profits based
on focus on specific segments
• The next step is to create strategies that increase revenues,
create long term relationships, and enhance customer retention
and loyalty programs. Strategies can include elimination of
least profitable aspects, re-engineering customer groups into
profitable ones by increasing revenue and decreasing costs.
 Review the Impact
• Any new strategy or practice needs to be implemented and
worked up accordingly. This needs to be reviewed after
appropriate periods of time to understand impact on customers.
Marketing
funnel
 What is the marketing funnel?

• A visualization for understanding the process of turning leads

into customers.
“simplified sales funnel”

Awareness
Consider
Purchase
Repeat
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indifference Like it Love it Beloved

Awareness Awareness Awareness Awareness

Consider
Consider Consider Consider

Purchase Purchase Purchase Purchase

Repeat Repeat Repeat Repeat

l ll
lo
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 consumer strategies match up to the funnel
For unknown For indifferent At the like it At the love it At the beloved
brand brands stage stage stage
• the strategic • the strategy • the strategy is • the focus shifts • the strategic
focus should be must establish to separate the tightening the challenge is to
to stand out so the brand in the brand from the bond with the create
consumers will consumer’s pack, creating most loyal outspoken,
notice the brand mind so they happy brand fans. loyal fans who
within a can see a clear experiences that are willing to
crowded brand point of build a trusted whisper to their
world, where difference over following over friends on the
they see an their current time. Only after brand’s behalf.
estimated 5,000 brand choice. they trust the
brand messages brand, they
per day. begin to open
up.
 Strict vs. Loose Funnels
• Strict funnels measure users who follow an exact path. Loose
funnels allow users to complete other actions between funnel
steps, as long as they complete the steps in order.
• When should you use strict or loose funnels?
• Why?
 Nonlinear funnels
• The buying process is no longer linear.
• Leads are coming into the funnel at different stages.
 How to set up your funnel
• Map the ideal buying process
• Define conversion goals
• Leverage the right content
• Identify the leaks
• Bring in qualified leads
 Benefits of funnel:
• Like content marketing, funnels help discover the strategies that will help
your visitors the most.
• Funnel stages help to understand the motivations that drive your potential
clients to research and purchase.
• Realize why a specific marketing strategy, like the download of white
papers, only works at certain funnel stages.
• Find out how and when to nurture relationships with potential clients and
current customers.
• Build a practical plan for marketing to users at different stages of the
funnel.