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Using the Five-Step Decision-Making Process to Manage Customer Profitability for Best Assignments

Certain steps are always involved when it comes to making decisions. If these steps are known everything becomes easier. A student should know about these in order to create a good assignment for submission. We, myhomeworkhelp.com using the five-step decision-making process to manage customer profitability homework help provide students with the best insight into the topic and help them create a perfect assignment. Taking our assistance increases their grade as well as their overall knowledge about the topic.

What is customer profitability (CP)?

This is profit which a firm will make by serving a single customer or a group of the customer during a specified time period, mainly the difference between revenues which are earned and amount associated with customer relationship during a specified time period.

Five steps in decision-making process

The five steps are given below in brief:

Step 1: Managing of Customer Segmentation

It refers to a process where customers are divided into different groups for the purpose of making decisions. It allows a company to give different value proposition or advertising to the different groups. Segments or groups are determined depending on the similarities of customers like preferences, personal characteristics or behaviors. To know more see our using the five-step decision-making process to manage customer profitability assignment help.

Step 2: Margin Measurement of Customer Segment

Though most of the firms have processes to assess their products’ profitability, most are behind when it comes to assessing theprofitability of customer. Customers can be classified into three groups: highly profitable, moderately profitable and unprofitable. Many companies believe the rule of 80-20 is applicable to customers; it suggests that 20% of customers are generally responsible for 80% of profits. But more extreme results can be seen for a lot of companies.

Step 3: Measuring Value of Customer Lifetime

Through this, the value of a customer can be understood. Calculations which are margin based focus on profits earned in current period due to purchases are done by the customer. The value of customer lifetime takes a totally different approach. It sees customers as a corporate asset. This also sees potential expected investment which can earn additional income in future. For more info get our using the five-step decision-making process to manage customer profitability homework help.

Step 4: Measurement of Customer Impact

The last valuable component provided by customer is the customer impact. The value of customer lifetime and activity based costing provide estimates of value which each segment and customer provide to a company through usage and purchasing.

Step 5: Management of Customer Profitability

This is the step where all results are taken and analyzed. This area uncovers parts where making a small improvement can lead to huge value improvements. It is described with detailed examples in our using the five-step decision-making process to manage customer profitability assignment help.

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