Customer profitability report

The objective of a customer profitability report is to increase the overall profitability of the business by focusing scarce sales resources on the most profitable customers. You can also use the report to ensure unprofitable customers don’t qualify for any discounts or offers.

Costs

You can help to improve profits using customer profitability analysis. Use it to highlight unprofitable customers so that they don’t qualify for discounts and special offers and even add a surcharge or a new price where expensive additional services are demanded.

Typical costs you might like to estimate for your Customer Profitability Report include:

• recurring communication costs to serve the customer
• recurring account management and cross selling costs, including share of salaries
• recurring costs of returns and credit notes
• costs of retention, via discounts and special offers
• cost of chasing debts, bad debts and interest.

The most readily available information will be for returns, credit notes, discounts and special offers.

Provide the sales director with a copy of your customer profitability report to help them target the most profitable groups of established and new customers.