Research sponsored by business intelligence leader SAS has found ways that top U.S. companies analyze customer transactions to produce higher revenue and profitability. The study, conducted by the American Productivity and Quality Center (APQC) and CAM-I, will be issued in April.
Titled "Calculating and Reporting Customer Profitability," the study examined best practices from leading U.S. companies and revealed the ways successful organizations use customer profitability insights to drive profitable revenue growth.
A key finding is that "best-practice organizations capture revenues and costs at the transaction level for each specific customer account, regardless of how many customers they had." Other companies only capture average or high-level costs, a practice which fails to provide accurate or useful profitability information about individual customers.
Another key finding is that best-practice organizations developed an enterprise-wide view of the customer by integrating customer data and applications across divisions. For example, since marketing owns customer profitability insights and finance produces customer profitability calculations, these departments achieve higher levels of success if they work together.
Understanding customer value in any customer-centric industry requires profitability analysis at the individual relationship level. Most traditional costing and profitability software cannot integrate and analyze the massive volumes of data from multiple data sources and business processes down to the individual customer account level.
SAS provides value in the area of high-volume profitability analysis. SAS Activity-Based Management, a key SAS performance management offering, enables businesses to analyze customer transaction histories, calculate profitability for up to hundreds of millions of customers, perform multidimensional analysis - by customer, product mix and channel - and deliver customer profitability insights to the right business units at the right time. Research from First Manhattan Consulting Group says retail banks lose money on up to half of their customers and that 75 percent of cross-sold accounts are not profitable, a frequent result of an inaccurate understanding of customer profitability and the behaviors that affect profitability.
The integrated SAS performance management capabilities, built on SAS Enterprise Intelligence Platform, enable companies to calculate customer profitability, derive customer insight and execute customer strategies. SAS offers these and other targeted business solutions as well as turnkey solutions for vertical markets.
APQC is a recognized leader in benchmarking, best practices and quality programs with more than 500 Global 1000 member companies. CAM-I is an international consortium known for its activity-based costing research.
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