Customer Profitability Mapping – A Powerful Tactic…
Understanding how your customers contribute to your profit and business performance is a powerful tactic that can set your business apart in your market and among your competitors.
When you understand how different customers contribute to your profit and cash flow, and what their further potential to do so is, you uncover powerful options for treating every customer fairly. But not equally.
Not all customers are created equal. Not all customers are profitable. Not all customers are top priority. Yet all customers can be treated well, just differently—when treated according to their contribution to profit, potential for profit improvement, and strategic importance.
Historically this type of analysis has been done on products and services.
The truth, however, is that a solid understanding of customer profitability is a bigger contributor to your financial performance and growth than the profitability of your individual products and services.
Customer Profitability MULTIPLIES Customer Sales
Studies consistently show that the true measure of contribution to business performance is customer profitability. Researchers have found that customer profitability contribution – instead of purely sales or cost information, or even product profitability information — has a stronger connection to performance in terms of Return on Assets, Return on Investment, Overall Competitive Position, Customer Satisfaction, and Sales.
Benefits of CPM Analysis
An effective customer profitability analysis can uncover missed opportunities that are currently in your business. And it can demonstrate the impact on performance of targeting specific customers or customer segments and the best tactics for doing it.
- Clear identification of which customers you should be trying to cultivate, which ones to grow, which ones to take “triage” actions, and which ones to transition.
- Creating additional capacity in existing resources by directing focus on high-yield customers and reducing focus on low-yield / high-drain customers.
- Align Sales, Marketing, Operations and Finance in an objective way that allows each to maximize their contribution to your overall success and strategic objectives.
- Streamlined decision-making across your entire organization and between departments and functions.
- Clear insight into the linkages between Operations, Marketing, Finance, Sales and their contribution to overall performance.
- Improved cash flow.
- Better focus on which customers, customer segments, and customer profiles align with your targeted strategic financial outcomes.
The Critical Linkage Between Operational and Financial Results
Most of our selected clients have great market positioning, strong sales and marketing, loyal clients, and solid financial reporting. And most of them run first-class solid businesses from an operational perspective.
Our Customer Profitability Map Analysis Program leverages the data that is created by these elements and looks that at them in an integrated way that encompasses all key areas of the business.
The real power is what happens after the analytics are done – when you can clearly see how changes in where you allocate resources, what customers you focus on, and how you do can have a dramatic and rapid impact on business performance.