customer profitability

The biggest challenge in measuring customer profitability is the assignment of costs to customers.

This can also be used for customer profitability analysis, identifying which customers are the most profitable and focusing on them more.

Like other profit measures, customer profitability is historical.

Margins represent a key factor in pricing, return on marketing spending, earnings forecasts, and analyses of customer profitability."

"There is nobody standing there with the answer to customer profitability," said Andrew Layton, a principal with Diamond Cluster International, a consulting firm specializing in the telecommunications industry.

"Customer Accounting and Customer Profitability Analysis - Some Theoretical Aspects and Some Empirical Evidence", SNF Working Paper, No. 67.

A typical business process that connects organizational entities is "order to cash" which can span sales, production, finance, logistics, billing and dispute management and influences important key performance indicators of the involved areas like "free cash-flow", "customer satisfaction", "customer profitability", "fulfillment cost".

Customer profitability (CP) is the profit the firm makes from serving a customer or customer group over a specified period of time, specifically the difference between the revenues earned from and the costs associated with the customer relationship in a specified period.

And unlike many Internet analysts, who fell into the habit in 1998 and 1999 of valuing Internet companies by page views, projected lifetime customer profitability, and other dubious metrics, Ms. Becker stuck to the tried and true method of valuing Yahoo based on its price-earnings ratio and earnings growth rate.