Truly understanding your customers is the best part of running a business and is one of the fundamental benefits of investing in data analytics.Every customer interacts with your business differently and the cost of servicing each one differs.Customer profitability analysis is when you analyze the sales value and cost to serve associated with specific customers or customer groups. It can be used to help companies understand how dependent they are on profitable customers and how many resources are spent on less profitable customers.
We’d like to demonstrate practical measures featured in the software that help map customers according to their profitability and also find new sales opportunities with existing customers.
Percentage share view
A comparison between profitability and sales value can help you understand your customer base better. Let’s consider the relationship between these two values – sales and profit. As total numbers, it might not be obvious that a customer with high sales value isn’t as profitable as you think. By switching from actual figures to percentage share view in Phocas, you can instantly reveal discrepancies between sales value and profitability.
In the example in this video, you can see the top customer, Tallahesse Limited in percentage view has 9.97% of total sales which is equivalent to only a 8.40% of profit value. Whereas the customers pegged as 7th, 8th and 9th, have greater profitability percent than their sales value.
Matrix share mode to benchmark customers across matched products
Another feature called matrix share mode allows you to identify what the benchmark relationship between two products is and in turn, help sales reps find missing business.
We use an example of an electrical distributor, where the sales manager know customers buy both fluorescent lamps and ballasts which regulate currents to the lamps. Phocas’ share matrix mode allows the distributor to determine the average ratio between the two products as 90:10, lamps to ballasts. In the product sub-class dimension, we can look at all the distributors’ customers and determine whether this ratio has been met for these products. If it hasn’t, sales reps can propose more lamps or ballasts at their next meeting.
What missed opportunities are sitting in your data? To find out more about building a case for data analytics in your business download this free eBook: Find sales revenue in your data.