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Customer Profitability Analysis

ACTG 6310 Term Paper. Customer Profitability Analysis. Chi Zhang. Customer ≠ Customer Highest revenue customer ≠ the best customer Same revenue ≠ Same profit. Customer Profitability Analysis. Customer Profitability Analysis Activity-based Costing.

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Customer Profitability Analysis

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  1. ACTG 6310 Term Paper Customer Profitability Analysis Chi Zhang

  2. Customer ≠ Customer • Highest revenue customer ≠ the best customer • Same revenue ≠ Same profit

  3. Customer Profitability Analysis

  4. Customer Profitability AnalysisActivity-based Costing

  5. Customer Profitability AnalysisActivity-based Costing

  6. Customer Profitability AnalysisWhale Curve Potential Profit 250% Actual Profit 100%

  7. Customer Profitability AnalysisSegmenting Customers

  8. Customer Profitability Analysis Customer Lifetime Value • Forecasting remaining customer lifetime • Forecasting of future revenues year-by-year • Estimation of costs for delivering products • Calculation of the Net Present Value of these future amounts

  9. Customer Profitability AnalysisStrategic Value • Cost and revenue management: revenues + cost pricing strategies • Risk management: customer-level insights mistakenly input costs • Strategic positioning: profitable - customized services unprofitable - self service

  10. Thank you

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