1 Customer Profitability To Create Value Session1
Understanding Customer
Profitability To Create Value
Bala V. Balachandran
J.L. Kellogg Distinguished Professor of
Accounting and Information Systems
The Current Business Environment
New Products
Manufacturing Excellence
Demanding Customers
Changing Workforce
Changing Technology
New Competitors
Decreasing Margins
Global Competition
© 2005 Bala V. Balachandran
Kellogg School of Management
Levers to Maximize Profit
© 2005 Bala V. Balachandran
Kellogg School of Management
Levers to Maximize Profit
© 2005 Bala V. Balachandran
Kellogg School of Management
Bala’s 4Ms
Measure Both Revenues & Costs Correctly (ABC)
Monitor Movement of Both Revenues & Costs
To Apply 50% Rule
For Benchmarking
Rule-I and Cashew nut Rule-II
& continuous Improvement
Manage For Action Plan
Yield Management / Revenue Management
Thru-put Management
Activity-Based Management
Process Value Analysis So That We Can:
Maximize Profitability
© 2005 Bala V. Balachandran
Kellogg School of Management
Strategic Process Management
© 2005 Bala V. Balachandran
Kellogg School of Management
Strategic Process Management
© 2005 Bala V. Balachandran
Kellogg School of Management
Strategic Process Management
Product Innovation/Excellence
•Nike
•Merck
•Sony
Latest Products
Activity Based
Management
Operational Excellence
•FedEx
•Wal-Mart
•Costco
Operational Excellence
Customer
Intimacy
Personal Touch and Feel
© 2005 Bala V. Balachandran
Kellogg School of Management
Strategic Profitability Management
“Constancy of Purpose”
© 2005 Bala V. Balachandran
Kellogg School of Management
Revenue Management
“Revenue management” is the art and science of predicting real-time consumer demand at the micromarket level and optimizing the price and availability of products." R. G. Cross
Keenly Observe Buying Behavior of Customers
Objective of RM is to Sell
The Right Product to the Right Customer at the Right
Time for the Right Price
© 2005 Bala V. Balachandran
Kellogg School of Management
C.M.:
Profitability To Create Value
Bala V. Balachandran
J.L. Kellogg Distinguished Professor of
Accounting and Information Systems
The Current Business Environment
New Products
Manufacturing Excellence
Demanding Customers
Changing Workforce
Changing Technology
New Competitors
Decreasing Margins
Global Competition
© 2005 Bala V. Balachandran
Kellogg School of Management
Levers to Maximize Profit
© 2005 Bala V. Balachandran
Kellogg School of Management
Levers to Maximize Profit
© 2005 Bala V. Balachandran
Kellogg School of Management
Bala’s 4Ms
Measure Both Revenues & Costs Correctly (ABC)
Monitor Movement of Both Revenues & Costs
To Apply 50% Rule
For Benchmarking
Rule-I and Cashew nut Rule-II
& continuous Improvement
Manage For Action Plan
Yield Management / Revenue Management
Thru-put Management
Activity-Based Management
Process Value Analysis So That We Can:
Maximize Profitability
© 2005 Bala V. Balachandran
Kellogg School of Management
Strategic Process Management
© 2005 Bala V. Balachandran
Kellogg School of Management
Strategic Process Management
© 2005 Bala V. Balachandran
Kellogg School of Management
Strategic Process Management
Product Innovation/Excellence
•Nike
•Merck
•Sony
Latest Products
Activity Based
Management
Operational Excellence
•FedEx
•Wal-Mart
•Costco
Operational Excellence
Customer
Intimacy
Personal Touch and Feel
© 2005 Bala V. Balachandran
Kellogg School of Management
Strategic Profitability Management
“Constancy of Purpose”
© 2005 Bala V. Balachandran
Kellogg School of Management
Revenue Management
“Revenue management” is the art and science of predicting real-time consumer demand at the micromarket level and optimizing the price and availability of products." R. G. Cross
Keenly Observe Buying Behavior of Customers
Objective of RM is to Sell
The Right Product to the Right Customer at the Right
Time for the Right Price
© 2005 Bala V. Balachandran
Kellogg School of Management
C.M.: