Measuring And Managing Customer Profitability

Learning Objectives

• To explore reasons for customers being considered the source of shareholder wealth creation.
• To identify how to shift the mindset from growing sales to growing profitable sales & to view customers as investments like in a stock portfolio to seek higher ROIs – return on customers (ROC)
• To recognize why the marketing and sales functions need accounting data to better formulate customer account strategies including compensation incentives.
• To recall how to measure and manage product, channel, and customer profitability
• To explore how measuring forward-looking customer lifetime value (CLV) differs from calculating historical customer/consumer profitability for B2C industries.

Course Description

In the years of study for identifying which businesses succeed, there come two distinct observations: One is the company that makes their customers believe that they are the net profit in the transaction with them, and the other is the company that actually does so. This calls for the idea that for a company that wants to survive the businesses longer and thrive better, they need to ensure that the customer profitability is maintained and remains the principal idea (or at least one of the principal ideas) of what they are doing. However, businesses being for-profit organizations, need to do this by ensuring that they earn in the process too. This is a complex matter to understand and implement at least from the perspective of accounting for ensuring customer profitability.

Customers increasingly view suppliers’ products and standard service lines as commodities. This means that suppliers must shift their actions toward differentiating their services, offers, discounts, and deals to different types of existing customers to retain and grow them. As a result of this shift from being product-centric to customer-centric, suppliers need an increased emphasis on measuring the current and future potential profitability of products, standard service lines, channels, and customers.

In the opinion of the learned speaker, Gary Cokins, Activity-based costing (ABC) provides the information lacking in traditional costing practices to address both issues – measuring customer and channel profitability including the costs of products and standard service lines. 

This online CPE webinar on Accounting covers the following Key Topics:

• Eras and issues with managerial accounting
• Basics on activity-based costing (ABC)
• Implementing with ABC rapid prototyping
• Calculating channel and customer profitability
• Applying analytics
• Historical versus predictive costing
• Barriers slowing the adoption rate

If you want to explore the subject from the data analysis perspective, you may be interested in Certified Financial Data Analytics Professional Course.

Overview

• Managerial Accounting – era and issues

  7 mins
• What is Activity-based costing (ABC)?

  12 mins
• Key issues faced while Implementing ABC

  28 mins
• How one should calculate a channel and customer profitability?

  33 mins
• What is analytics and how to apply it successfully?

  56 mins
• Historical costing versus predictive costing

  59 mins
• Which are major barriers that slow down the adoption rate of ABC?

  77 mins
• Major excuses preventing being progressive

  80 mins