Customers Profitability Analysis
Topic Gateway Series
Customer profitability analysis
Customer profitability analysis
Topic Gateway Series No. 55
1
Prepared by Jasmin Harvey and Technical Information Service
January 2009
Topic Gateway Series
Customer profitability analysis
About Topic Gateways
Topic Gateways are intended as a refresher or introduction to topics of interest to CIMA members. They include a basic definition, a brief overview and a fuller explanation of practical application. Finally they signpost some further resources for detailed understanding and research.
Topic Gateways are available electronically to CIMA members only in the CPD
Centre on the CIMA website, along with a number of electronic resources.
About the Technical Information Service
CIMA supports its members and students with its Technical Information Service
(TIS) for their work and CPD needs.
Our information specialists and accounting specialists work closely together to identify or create authoritative resources to help members resolve their work related information needs. Additionally, our accounting specialists can help CIMA members and students with the interpretation of guidance on financial reporting, financial management and performance management, as defined in the CIMA
Official Terminology 2005 edition.
CIMA members and students should sign into My CIMA to access these services and resources.
The Chartered Institute of Management Accountants
26 Chapter Street
London SW1P 4NP
United Kingdom
T. +44 (0)20 7663 5441
F. +44 (0)20 7663 5442
E. tis@cimaglobal.com www.cimaglobal.com 2
Topic Gateway Series
Customer profitability analysis
Definition and concept
Customer Profitability Analysis (CPA) is the:
‘Analysis of the revenue streams and service costs associated with specific customers or customer groups.‘
CIMA Official Terminology 2005
Kotler (1997) defines a profitable customer as:
‘A person, household or company that, over time, yields a
Customer profitability analysis
Customer profitability analysis
Topic Gateway Series No. 55
1
Prepared by Jasmin Harvey and Technical Information Service
January 2009
Topic Gateway Series
Customer profitability analysis
About Topic Gateways
Topic Gateways are intended as a refresher or introduction to topics of interest to CIMA members. They include a basic definition, a brief overview and a fuller explanation of practical application. Finally they signpost some further resources for detailed understanding and research.
Topic Gateways are available electronically to CIMA members only in the CPD
Centre on the CIMA website, along with a number of electronic resources.
About the Technical Information Service
CIMA supports its members and students with its Technical Information Service
(TIS) for their work and CPD needs.
Our information specialists and accounting specialists work closely together to identify or create authoritative resources to help members resolve their work related information needs. Additionally, our accounting specialists can help CIMA members and students with the interpretation of guidance on financial reporting, financial management and performance management, as defined in the CIMA
Official Terminology 2005 edition.
CIMA members and students should sign into My CIMA to access these services and resources.
The Chartered Institute of Management Accountants
26 Chapter Street
London SW1P 4NP
United Kingdom
T. +44 (0)20 7663 5441
F. +44 (0)20 7663 5442
E. tis@cimaglobal.com www.cimaglobal.com 2
Topic Gateway Series
Customer profitability analysis
Definition and concept
Customer Profitability Analysis (CPA) is the:
‘Analysis of the revenue streams and service costs associated with specific customers or customer groups.‘
CIMA Official Terminology 2005
Kotler (1997) defines a profitable customer as:
‘A person, household or company that, over time, yields a
References: Bromwich, M. (1990). The case for strategic management accounting: the role of accounting information for strategy in Competitive Markets, Accounting, CIMA Official Terminology, (2005). London: CIMA Publishing Botten, N Epstein, M.J. and Yuthas, K. (2007). Managing customer value. Management Accounting Guideline, Canada: The Society of Management Accountants of Kotler, P. (1997). Marketing management: analysis, planning, implementation and control CIMA publications CIMA Official Terminology, (2005) Aksoy, L, Bejou, D. and Keiningham, T.L. (eds.) (2006). Customer lifetime value: reshaping the way we maximize profits Customer profitability analysis. Institute of Chartered Accountants of England and Wales (ICAEW), 2002