Comments on: Profitability Analysis: The “Magic Bullet” for Strategic BI Success? http://timoelliott.com/blog/2008/02/profitability_analysis_the_mag.html Timo Elliott's Business Analytics Blog Fri, 18 May 2012 09:07:53 +0000 hourly 1 http://wordpress.org/?v=3.3.2 By: Matthias Heid http://timoelliott.com/blog/2008/02/profitability_analysis_the_mag.html/comment-page-1#comment-4336 Matthias Heid Mon, 22 Mar 2010 09:51:21 +0000 http://192.220.58.236/blog/?p=91#comment-4336 Nice article. The 80/140 Rule is similar to the results of a recent scientific sales management research article (Managing Dynamics in a Customer Portfolio by Homburg, Steiner & Totzek in Journal of Marketing Vol. 73) There they find that the usual "static" customer value calculation overestimates the top tier customers and neglects the value of the middle tier customers. A dynamic approach shows better results and gives insight how to deal with different customer segments. The CLV Calculation there is also done by BI Software from SAS using data-mining and shows that there is a huge potential for using those technologies in customer management. Matthias Heid, SAP Nice article.
The 80/140 Rule is similar to the results of a recent scientific sales management research article (Managing Dynamics in a Customer Portfolio by Homburg, Steiner & Totzek in Journal of Marketing Vol. 73)
There they find that the usual “static” customer value calculation overestimates the top tier customers and neglects the value of the middle tier customers.
A dynamic approach shows better results and gives insight how to deal with different customer segments.
The CLV Calculation there is also done by BI Software from SAS using data-mining and shows that there is a huge potential for using those technologies in customer management.

Matthias Heid, SAP

]]> By: Gary Cokins, SAS http://timoelliott.com/blog/2008/02/profitability_analysis_the_mag.html/comment-page-1#comment-55 Gary Cokins, SAS Mon, 18 Feb 2008 15:05:18 +0000 http://192.220.58.236/blog/?p=91#comment-55 Tim, I totally agree with you about the need to apply activity-based costing methods to measure customer profitability. In the B2C domain, I realize there is also need to extend this to evaluate the future potential of a customer. This involves a customer lifetime value (CLV) calculation. But there is little consensus on how to apply this metric. Consequently, I have asked a professional society to fund research on this topic, and the grant proposal Web link is at: <a href="http://www.imanet.org/research_foundation_call.asp#A" rel="nofollow">http://www.imanet.org/research_foundation_call.asp#A</a> I welcome dialog. -- Gary Cokins, SAS Tim,
I totally agree with you about the need to apply activity-based costing methods to measure customer profitability. In the B2C domain, I realize there is also need to extend this to evaluate the future potential of a customer. This involves a customer lifetime value (CLV) calculation. But there is little consensus on how to apply this metric. Consequently, I have asked a professional society to fund research on this topic, and the grant proposal Web link is at:
http://www.imanet.org/research_foundation_call.asp#A
I welcome dialog. — Gary Cokins, SAS

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