Abstract
The primary focus of modern management methods lies in achieving consumer or customer satisfaction, which constitutes the ultimate priority. Customers represent the core of success for any organization; thus, the number of "customer-driven" organizations is substantial and steadily increasing. Successful organizations (Prosper) place significant emphasis on their customers within the decision-making process. Accordingly, management accountants are paying increasing attention to Customer Profitability Analysis (CPA), whereby they record and analyze customer-specific revenues and costs. By obtaining this information, managers can ensure that customer contributions add sizably to the organization’s overall profitability. In fact, customer profitability analysis is a specialized form of Segment Profitability Analysis. Analyzing profitability by segment assists managers in identifying the key factors driving organizational performance. The importance of measuring and analyzing customer profitability stems from the fact that customers are considered vital intangible assets. Management decisions can either enhance or diminish the value of these assets. Consequently, it is essential to overcome the factors influencing measurement and analysis—whether related to the revenues or costs associated with each customer—and to accurately identify various cost drivers for each customer using modern tracking and calculation techniques.
DOI
10.33095/jeas.v14i52.1417
Subject Area
Accounting
First Page
305
Last Page
319
Rights
http://creativecommons.org/licenses/by-nc-nd/4.0
Recommended Citation
Aljbwry, N. J., & Khudhair Al-taie, B. F. (2008). Customer Profitability Analysis. Journal of Economics and Administrative Sciences, 14(52), 305-319. https://doi.org/10.33095/jeas.v14i52.1417
