Customer Profitability Analysis (with activity-based costing, ABC)

The only value a company will ever create for its shareholders and owners is the value that comes from its customers – the current ones and the new ones acquired in the future. Customer profitability reporting, using activity-based costing (ABC) principles, aids in determining which types of customers to retain, grow, win-back, and acquire and how much to optimally spend doing each action.

Learning Objectives
  • Recognize why customers are the source of shareholder wealth creation
  • Identify and measure resource cost drivers
  • Identify why, as differentiation from product advantages is reduced or neutralized due to commoditization, the service level differentiation matters and the customer relationship grows in importance as a competitive advantage
  • Recognize how to shift the mindset from growing sales to growing profitable sales
  • Describe why the marketing function needs accounting data to better formulate customer account strategies
  • Identify how to measure and manage product, channel, and customer profitability
  • Identify how measuring forward-looking customer lifetime value (CLV) differs from calculating historical customer profitability

Major Topics
  • Constructing a cost assignment network model
  • Identifying and measuring resource cost drivers
  • Identifying and measuring activity cost drivers
  • Distinguishing accuracy with relevance
  • Viewing customers as an investment portfolio with ROIs
  • Recognizing high from low maintenance customers
  • Rationalizing which customers to focus on
  • Customer lifetime value (CLV) for business to consumer (B2C) industries
  • Analyzing the information to lift profits from customers
  • Changing salesforce incentives to blend sales and profits commissions

Who Should Attend

• Chief financial officers (CFOs)
• Controllers
• Management accountants
• Budget managers
• Strategic planners
• Marketing managers
• Sales managers
• Business analytics specialists

Fields of Study
Management Services


Prior activity-based costing learning

Business Learning Institute

CPE Credits


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