Study Uncovers Drivers for Higher Revenues

How can companies achieve greater revenue and profitability? A recent research study sponsored by SAS provides some interesting answers to that question.

The study, conducted by the American Quality and Productivity Center (APQC) and CAM-I, examined best practices from leading U.S. companies and explored how successful organizations use customer profitability insights to deliver revenue growth. The report, titled “Calculating and Reporting Customer Profitability,” will be released in April. 

Understanding customer value
A key finding is that “best-practice organizations capture revenues and costs at the transaction level for each specific customer account, regardless of how many customers they had.” Other companies only capture average or high-level costs, a practice that fails to provide accurate or useful profitability information about individual customers.

Another notable finding is that best-practice organizations developed an enterprisewide view of the customer by integrating customer data and applications across divisions. For example, since the marketing department owns customer profitability insights and finance produces customer profitability calculations, these departments achieve higher levels of success if they work together. 

Understanding customer value in any customer-centric industry requires profitability analysis at the individual relationship level. Most traditional costing and profitability software cannot integrate and analyze the massive volumes of data from multiple data sources and business processes down to the individual customer account level.

Calculating customer profitability
SAS provides unmatched value in high-volume profitability analysis. SAS^® Activity-Based Management, a key SAS performance management solution, enables businesses to analyze customer transaction histories, calculate profitability for as many as hundreds of millions of customers, perform multidimensional analysis – by customer, product mix and channel – and deliver customer profitability insights to the right business units at the right time.

Research from First Manhattan Consulting Group says retail banks lose money on up to half of their customers and that 75 percent of cross-sold accounts are not profitable, a frequent result of an inaccurate understanding of customer profitability and the behaviors that affect profitability. A free white paperby SAS and Peppers & Rogers Group offers advice on ways to measure and analyze customer value and achieve competitive advantage.

The integrated SAS performance management capabilities, built on the SAS Enterprise Intelligence Platform, enable companies to calculate customer profitability, derive customer insight and execute customer strategies. SAS offers these and other targeted business solutions, as well as turnkey solutions for vertical markets.

A study of top U.S. companies reveals how customer profitability insights can drive revenue growth.