Customer Profitability Analysis
The evaluation of customer segments or individual customers based on the profitability they generate, influencing sales and marketing strategies.
Implications
The process of determining the profitability of individual customers or customer segments by comparing the revenue they generate against the costs of serving them, used to inform customer relationship management and marketing strategies.
Example
Example: A financial services firm conducts customer profitability analysis to identify which clients generate the most profit, leading to targeted retention efforts for high-value customers.
Related Terms
Different from product profitability analysis, which focuses on the profitability of products, customer profitability analysis looks at the financial contribution of customers.
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