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Customer profitability analytics
What is it?
Customer profitability analytics is the process of identifying which of your customers are actually making you money. There is often an assumption in business that any customer is a good customer, but that is not always the case. Customer profitability usually falls within the Pareto principle or 80/20 rule.
In other words, there is likely to be 20 per cent of your customers that account for 80 per cent of your profit. Conversely there is also likely to be another 20 per cent of your customers that account for 80 per cent of your customer-related costs. Knowing which is which is important.
Why does it matter?
Customer profitability matters because if you can’t differentiate between the customers ...
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