Reveal the true customer profitability
When done right, customer profitability analyses can bring radical new insights at strategic and tactical levels not only showing how much profit every customer generates, but also revealing the key drivers to improve the profitability level across the business. To do this, companies should factor all price leakages and avoidable costs into a structured (pocket) margin waterfall. This shows all relevant cost- and pricing-elements allocated to the appropriate product and/or customer level - be it through simple distribution codes or more complex activity-based costing models.
A multitude of profit levers
Looking to the profit equation, customer profitability is – simply stated – determined by the revenue and costs linked to that customer. However, the underlying factors on both sides provide a whole range of levers to ‘pull’ - including discount structures, product-range decisions, logistics-pricing policies, etc. Through custom profit waterfalls encompassing all those elements, Equazion creates - across your organization - the awareness that pulling one lever affects other departments and other elements in the equation.
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Enrich your figures with business reality
Proper decisions can only be made by linking the breakdown and distribution of the client profitability to market and business characteristics, that are specific for your business. Therefore Equazion can be configured to incorporate your business reality, customized waterfalls, specific product and customer segments, personal hierarchies, etc. Moreover, within Equazion you can set targets for every customer or product dimension, as well as benchmark them with peers. In this way, the customer profitability metrics become highly actionable.
