Managing Customers Profitably

This book is a response to a need in the market place in thefast-growing field of customer profitability analysis and theprofitable management of customer relationships. It combinesinnovative approaches to calculating the value of customers, withthe management strategies necessary to make and keep customersprofitable.

It includes easy-to-follow instructions on how to calculatecustomer profitability, including worked examples (non-technical)and discusses strategies and their applications for organizationsto manage customers profitably. Based on cases and feedback fromthe KAM Club and other research, there will be manybusiness-to-business as well as business-to-consumer examples.

The book assumes some level of numeracy in its readership.

The contents include:

• Assessing product costs, costs to serve and how these can beestimated, and how to deal with customer-specific overheadcosts.
• It discusses the uses and limitations of the use of customerprofitability analysis, and illustrates how to calculate customerlifetime value using two methods, one with actual numbers and onewhich estimates relative customer lifetime value.
• Provides an innovative approach to calculating the lifetimevalue of a customer by taking risk into account.
• Demonstrates how to recognise and value the relationshipbenefits of customers, such as word of mouth.
• Brings into discussion the idea that how customers aremanaged, links to their profitability.
• Describes how financial portfolio analysis and theory apply tomarketing and how, their application to marketing relates to theoptimisation of marketing spend.