Customer Profitability Analysis

Problem:  Difficulty making fact-based management decisions due to a lack of information on the relative profitability of retail customers, products, services, and channels.

Goal: Improve the client's ability to make profitable, fact-based decisions about customer strategy, marketing, produce pricing, promotion, and retail store management..

Approach:  In collaboration with staff from IT, operations, and management, FA developed procedures to accurately estimate the “customer-level P&L statement” using existing data sources. The client staff was trained in how to make fact-based assessments using a combination of technology and information analytics.

Result: 

• Identified the 30% of customers who generate nearly 100% of retail profits, enabling better focus of resources.
• Identified value-destroying promotions that encouraged unprofitable customer behavior.
• Created repeatable methodology and process documentation, enabling data to be “refreshed” at will.
• Integrated methodology into existing Business Intelligence (BI) platform.