When it comes to your customers, how knowledgeable are you about their behavior and its overall impact on your organization? Can you easily identify the most profitable customers? What about the most unprofitable customers?
In today’s economy, keeping an eye on your finances is critical to your business success. Many businesses tend to focus all of their efforts on how they can decrease operational costs through efficiency-generating tools or budget restructuring, missing the cost-cutting opportunities right in front of them. The truth of the matter is, there is a wealth of information contained in your company’s information systems that can lead to significant cost-savings and profitability gains. You just have to know where to look.
Business Intelligence’s Role in Customer Profitability
With the right level of insight into your customer data, you can determine just how much time and money you are spending to acquire new customers, retain old ones, or market products that are not reaching sales expectations. Beyond the transactional history, your customer relationship management (CRM) system contains a wealth of information that can be used to cut costs and boost profit. Many companies, unfortunately, do not know how to tap into the customer-detailed information they need to improve customer profitability, having to navigate a myriad of decisions almost blindly
Business intelligence (BI) can help you identify which customers are the most profitable and which ones are unprofitable, allowing you to focus your efforts on the appropriate actions related to customer acquisition and retention. BI tools pull information from all of your systems, providing you with invaluable insight into:
- Customer performance on a monthly , weekly and daily basis
- Customer purchasing trends
- Recency, Frequency, Monetary (RFM) analysis
- Net profitability
- Lifetime revenue contribution
- Discount impact
- Channel profitability
If your customer relationship management consists only of managing accounts receivables and focusing on overall customer profitability determined by GL-based performance measures, you are missing out on strategic opportunities to increase the lifetime economic value of your customers and the profitability of your business (see sample customer with analytics in Sage CRM below). Your level of knowledge about your customers, their behavior and its overall impact on the profitability of your organization is crucial to your success. For more information about how you can use business intelligence to boost your customer intelligence and leverage important financial data, download our whitepaper, “5 Ways Your Financials Can Help You Run Your Business Better.”
