Customer Profitability Analysis Part1

I am planning in this blog to gradually build your knowledge on customer profitability analysis, the final step of improvement and how we get there. In order to attract your full attention-I hope-I will start showing and explaining you the WhaleCurve, demonstrating a small organization of 10 people. The team is fully multifunctional, which means everybody can go and do everybody's else's job. They are the maker of three specialty products, their special knowledge is necessary to make it to the highest standards. Let's give them a name: say, Specialty Products Ltd. . They have 50 customers paying for their products.

In my RBMCalculator I did run a demonstration model with those parameters , creating a multi-dimensional business model. Calculating the customer costs by decomposing the aggregated accounting costs throughout the organization using the root caused drivers, etc. . The details to this we do in a later blog. Based on the cost, a revenue was generated, and the profit calculated. So I finally could run the WhaleCurve, which I'm showing and explaining you here.





The WhaleCurve in front of you is like a finger print for this organization, showing various information at a glance. Let me first explain the WhaleCurve itself. It is a two axis diagram showing on the left side sales volume against the peaks-the bars and on the right side showing the cumulative customer profitability versus the green blue and the red line. On the X. axis is the dimension customer is shown. The WhaleCurve is interactive and zoomable and some customers are hidden and only will be shown by zooming in in this area.
Customer profitability in cumulative form is sorted in descending order meaning the very left one has the highest profit, followed by the next one. The cut points between green and blue and blue and red show where the 80% of the maximum profit is achieved and by how many customers. The maximum point- and blue and red cut point- is simply the hundred percent profit-the peak in this curve, whereas the profit of the income statement is the final endpoint of the red curve. Also shown up on top of the graphic, in this case, with 23k Euro.


Here comes a very interesting part: around 10% of the customers one through seven make almost 300% of the income profit of 23,000. And we learned that from customer 29 through customer 67, those customers destroy the profit from the top achievement of around 90,000 down to 23,000. All of those information won't be given in an accounting statement. Furthermore, we are able to look at the P&L for each customer with all the details of revenue, cost, profit the prize, the unit costs the unit profit as well as the volume, see below

Ertrag der ersten 9% der Kunden das Doppelte der G&V

Überraschung!
Nicht einmal 10 % der ertragsstärksten Kunden erbringen einen Ertrag, der doppelt so hoch ist wie der Ertrag aus der Gewinn und Verlustrechnung!!

Die nach dem Ertrag sortierten ersten 85 Kunden- aus über 900 - erbringen bereits den doppelten Ertrag der circa 3,3 Millionen € aus der G&V.

In diesem extremen Beispiel lässt sich sehr schön erkennen, wie viel Blindheit aus den Daten der normalen Buchhaltungstechnik erwächst.
Oder kennen Sie Ihr Kundengewinn Profil wie hier dargestellt? Außerdem wird jeder Kunde mit einer vollständigen Gewinn und Verlustrechnung gezeigt.