Customer and product profitability analysis |
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Customer and product profitability analysis (CPP) is an important and powerful tool. It allows companies to calculate and understand profitability at the individual customer and product level and to analyse underlying revenue and cost drivers.This kind of insight is critical to successfully navigating the downturn.
Applying these insights across finance, sales and marketing and supply chain maximises profitability across the portfolio, and thus the value of the company as a whole. Companies that analyse customer and product profitability can gain revolutionary insights. In companies where decisions have previously been based on volume and revenue information only, in our experience management will realise that many of their key customers and top products are not as profitable as expected and can even destroy a significant proportion of the company’s value.
CPP helps you to understand which customers and which products are most profitable and therefore critical to your company. This new transparency enables you to re-evaluate your customer and product portfolio, and take strategic decisions over which products or customers should be retained, developed, or even ‘neglected’.
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