CUSTOMER GROUP
PROFITABIL
ITY
ANALYSIS
Annissa Balqis Budhiani20190420183
Laily Qonita 20190420214
Irvi Media Muslim 20190420223
Customer profitability analysis identifies
Definition customer services activities and cost drivers and
determine the profitability of each or group of
customers.
Customer profitability analysis allows managers to:
• Identify most profitable customers.
• Manage each customer’s costs-to-serve.
• Introduce profitable new products and services.
• Discontinue unprofitable products, services, or customers.
• Shift a customer’s purchase mix toward higher-margin products and service
lines.
• Offer discounts to gain more volume with low costs-to-serve customers.
• Choose types of after-sale services to provide.
CUSTOMER COST ANALYSIS EXAMPLE
Customer cost analysis identifies
Ordering process cost
activities and cost drivers to service
customers before and after sales, not
Billing, collection and payment process cost
including product costs. Traditionally these
costs are hidden in the customer support,
Accounts receivable and carrying cost
marketing, and sales function. ABC/M can
help managers to understand their Customer service cost
costs to serve customers.
Selling and marketing cost
Classification of Customer Cost
1. Customer unit-level cost
A cost resources consumed for each unit sold to a customer.
Examples shipping cost when the freight charge is based on the number of units
shipped,
2. Customer batch-level cost
A cost resources consumed for each sales transaction.
Examples include order-processing costs,
3. Customer-sustaining cost
A cost resources consumed to service a customer regardless of the number of units
or batches sold. Examples are salespersons’ travel costs to visit customers
Classification of Customer Cost
4. Distribution-channel cost
A cost resources consumed in each distribution channel the firm uses to service
customers. Examples are operating costs of regional warehouses that serve
major customers and centralized distribution centers that serve small retail outlets.
5. Sales-sustaining cost
resources consumed to sustain sales and service activities that cannot be traced to an
individual unit, batch, customer, or distribution channel. Examples are general corporate
expenditures for sales activities, and salary, fringe benefits, and bonus of
the general sales manager.
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Customer
Profitability
Analysis
Customer profitability analysis combines customer
revenues and customer cost analyses to assess
customer profitability and helps identify actions
to improve customer profitability.
Example:
Hour Monday Tuesday Wednesday Thursday Friday
8:00 / 9:00 Lesson 1 Lesson 3 Lesson 5
9:00 / 10:00 Lesson 1 Lesson 2 Lesson 3 Lesson 5
10:00 / 11:00 Activities Lesson 3 Lesson 4 Review
11:00 / 12:00 Activities Activities Activities
12:00 / 13:00 Activities Exam
13:00 / 14:00
Notes
The following are among these relevant
factors:
1. Growth potential of the customer, the customer’s industry, and its cross-selling potential.
2. Possible reactions of the customer to changes in sales terms or services.
3. Importance of having the firm as a customer for future sales references, especially when the
customer could play a pivotal role in bringing in additional business.
Customer Lifetime Value and Customer Equity
Customer lifetime value (CLV) is the net
present value of all estimated future profits
from the customer.
Customer equity (CE) is the sum of the
CLVs for all the firm’s customers.
The goal of using CE is to provide a roadmap for the firm to use in
implementing its strategy.
The key is to understand the drivers of CE which can be described in three
broad categories:
Value Equity Retention Equity
Brand Equity
IMPLEMENT
ATION
ISSUES AND
EXTENSIONS
IMPLEMENTATI
ON ISSUES
A successful ABC/M implementation requires close
cooperation among management accountants,
engineers, and manufacturing and operating
managers. They need to act as a team in identifying
activities, cost drivers, and requisite information,
both financial and nonfinancial.
Three important issues to consider in ABC/M implementation:
1 3
Multistage
Activity-Based
Costing 2 Time-Driven Activity-
Based Costing
Resource Concumption
Accounting
M
U C
L A
T S
I A H
S C
T T
F
A I
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G V
O
E I
W
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S
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Difference between TDABC and
ABC
TDABC ABC
Disadvantages of TDABC
Time-Driven
EXAMPLE
Activity-Based
Costing
(TDABC)
TDABC provides a direct way to
measure unused capacity
TDABC then calculate the unused capacity
cost by determining the activity cost and
netting it from the total expense
TDABC can be expanded to include
complexities in the activity, in what is
called a time equation
Organize Your Week
Hour Monday Tuesday Wednesday Thursday Friday
8:00 / 9:00 Lesson 1 Lesson 3 Lesson 5
9:00 / 10:00 Lesson 1 Lesson 2 Lesson 3 Lesson 5
10:00 / 11:00 Activities Lesson 3 Lesson 4 Review
11:00 / 12:00 Activities Activities Activities
12:00 / 13:00 Activities Exam
13:00 / 14:00
Notes Make a quiz game as a review activity
Lesson Contents
Lesson 1 Lesson 2
● Enter information about the ● Enter information about the
lesson here lesson here
● Enter information about the ● Enter information about the
lesson here lesson here
● Enter information about the ● Enter information about the
lesson here lesson here
● Enter information about the ● Enter information about the
lesson here lesson here
A Timetable
9:00 - Math 10:00 - History
Day 1
11:00 - Science 12:00 - Art
9:00 - Art 11:00 - English
Day 2
10:00 - Math 12:00 - Science
This Is a Map
Mercury
Mercury is the closest
planet to the Sun
Mars
Despite being red,
Mars is a cold place
33.4%
Mercury is the closest
planet to the Sun
54%
Despite being red, Mars is
actually a cold place
12.6%
Jupiter is the biggest planet
in the Solar System
Venus Mars
Mercury is the closest Venus is the second planet Despite being red, Mars is
planet to the Sun from the Sun actually a cold place
Jupiter Saturn Neptune
Jupiter is the biggest planet Saturn is the ringed one and Neptune is the farthest
in the Solar System a gas giant planet from the Sun
Our Team
Jenna Doe John James
You can replace this image You can replace this image
with a different one with a different one
Project Schedule
Lesson 1 7h
Task 1 3h
Task 2 4h
6h Lesson 2
2h Task 1
4h Task 2
Monthly Calendar
sun mon tue wed thu fri sat
Mobile Web
You can replace the image on
the screen with your own work.
Just delete this one, add yours
and send it to the back
A Timeline Always Works Well
Day 1 Day 3
Despite being red, Jupiter is the biggest
Mars is a cold place planet of them all
Day 2 Day 4
Mercury is the closest Saturn is a gas giant
planet to the Sun and has rings
Thanks a bunch!
