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Customer Profitability Analysis (in short CPA) is a management accounting and a credit underwriting method, allowing businesses and lenders to determine the profitability of each customer or segments of customers, by attributing profits and costs to each customer separately. CPA can be applied at the individual customer level (more time ...
RFM is a method used for analyzing customer value and segmenting customers which is commonly used in database marketing and direct marketing. It has received particular attention in the retail and professional services industries. [1] RFM stands for the three dimensions: Recency – How recently did the customer purchase?
The customer base is a group of customers who repeatedly purchase the goods or services of a business.These customers are a main source of revenue for a company. The customer base may be considered a business's target market, where customer behaviors are well understood through market research or past experience.
Banks, insurance companies and pension funds make use of customer analytics in understanding customer lifetime value, identifying below-zero customers (that is a segment of the customer base that costs more than they are worth) which are estimated to be around 30% of customer base, increasing cross-sales, managing customer attrition as well as ...
Customer intelligence is a key component of effective customer relationship management (CRM), and when effectively implemented it is a rich source of insight into the behaviour and experience of a company's customer base. As an example, some customers walk into a store and walk out without buying anything. Information about these customers ...
Customers as assets measures the lifetime value of the customer base and allows businesses to measure several factors such as the cost of acquisition and the rate of churn. Cross-sell analysis identifies product and service relationships to better understand which are the most popular product combinations.
The installed base of company's products represents a valuable customer base that is already using their products, services or systems [citation needed].This provides companies with an opportunity to upsell and cross-sell their products to existing customers [citation needed], as well as to use the information about their customer base to inform future product development and marketing efforts.
In the event that customer needs across the entire market are relatively similar, then the business may decide to use an undifferentiated approach. On the other hand, when customer needs are different across segments, then a differentiated (i.e. targeted) approach is warranted. In certain circumstances, the segmentation analysis may reveal that ...