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.
Course ID: CPAABC
Customer Profitability Analysis (with activity-based costing, ABC)
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 ServicesPrerequisites
Prior activity-based costing learning