Should we calculate the customer profitability?
Product pricing and profitability is a must for a firm. How about the customer profitability? The banks spend years and many working days to calculate the customer profitability and make it compliant with the trial balance of the bank. And the financial control departments do not get interested in learning more about the customer profitability, because what they are interested in trial balance sheet , product and segment profitability.
The marketing people also do not care about the customer profitability. There are pretty good reasons for that: Even if they know who their most profitable and least profitable customers are, they can not act based on that information.
They simply can not get rid of the least profitable customers from the database as it is against the banking law. If they start treating customers differently at Call center or at branches, it is also against the consumer laws. The customers can sue the firm accusing of discrimination based on something which is not transparent to the customer.
So, what exactly you do with your customer profitability algorithm except satisfying your own intellectual curiosity?
The marketing people also do not care about the customer profitability. There are pretty good reasons for that: Even if they know who their most profitable and least profitable customers are, they can not act based on that information.
They simply can not get rid of the least profitable customers from the database as it is against the banking law. If they start treating customers differently at Call center or at branches, it is also against the consumer laws. The customers can sue the firm accusing of discrimination based on something which is not transparent to the customer.
So, what exactly you do with your customer profitability algorithm except satisfying your own intellectual curiosity?
