Who are your most profitable customers?
Determine your most profitable customers
Your hard work is paying off, and your business is making profit. Great! But do you have insight into which customer or which customer segment yields the most profit? Start analyzing and base the next steps for your business on facts and figures instead of feelings and guesses.
Establish the customer profitability for your business using Multi-dimensional Costing (MDC)
Opposed to Activity-based costing (ABC), which is a single-dimensional costing method, MDC lets you allocate costs to multiple dimensions, like:
- Customer groups etc.
The dimensions cause or trigger costs, allowing you to see what dimensions cause or trigger the highest costs. Traditionally, MDC is used to determine product profitability: what are the costs or profit per transaction? However, it’s also the perfect method to analyze customer profitability.
Most important features
of Customer profitability
Whale-curve has helped many companies steer towards success
Insights into your loss-making products versus profit-making products
For professionals, tooling that offers multiple dimensional costing is an absolute must
Exclusive insights on your costs and performance flows
Using MDC to analyze customer profitability
Get the insight into customer profitability you need to take the right next steps for your business with Multi-dimensional Costing. To put it into an example: customer A belongs to client segment B. He or she buys product C in land D through channel E. By allocating costs of each of these dimensions to your sales transactions, you end up with a more precise cost allocation. And best of all: better insights into your customer profitability. These insights are useful for easier decision-making when improving business performance: what client segments should you invest in, focus on, or pay less attention to? This could be clients (or segments) who shop online or in stores, place larger or smaller orders, buy larger or smaller quantities, or clients from certain countries or areas.
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