Customer profitability analysis: Frustration leads to evolution
Susan M. Jackman
Abstract: This paper traces the evolution of a customer profitability analysis system used by a major New Zealand retail bank. It is shown that the Bank currently uses a first-generation customer profitability analysis system, but dissatisfaction with the system has developed. The current system’s limitations do not allow the Bank to effectively use customer profitability information to support its marketing strategy. As a result, the Bank is in the process of designing and implementing a second-generation customer profitability analysis system. Issues concerning the design of the new system are discussed. Although the firm is still in the process of implementing the new system, a description of the decisions it is making during the design phase provides useful insight for firms contemplating implementation. How the new information will be used to support the firms’ marketing strategy is then described. This amalgamation of marketing and management accounting has been called for in the management accounting literature.