Customer Profitability Analysis
The basic purpose of any business entity is to make a profit for its owners and maximize these profits with all possible means. The profit maximization includes the efforts to increase the number of customers that buy the product and services of the organization. For business entities and management every single customer is important. They cannot afford to lose even a single customer because of his high net worth. For the purpose of calculating the profitability and potential value of each customer, the businesses use various tools and formulas. One such very popular measure of customer value is the customer profitability analysis.
What is it used for?
In many organizations, these documents are used as planning tools for future goals and objectives. While many other business entities use them as means to analyze the past performance of their business processes. In either way, the customer profitability analysis template is a formal official document that helps in the evaluation of the customer’s value.
This process involves the assignment of costs and revenues to a particular segment of customers rather than the product that is being sold. This approach helps provide an insight into the basic processes that can be employed to improve the customer satisfaction and provide input for designing, manufacturing and selling process of the product.
This tool can be valuable for different types of functions and departments including finance, marketing, and sales. You can, therefore, use the customer profitability analysis template for a specific segment of the customer base or individual customers.
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