Asked by Shelby Alford on Mar 10, 2024
Verified
Which of the following is an appropriate way to analyse customer profitability?
A) The cost of servicing a customer calculated as a percentage of the customer's gross margin.
B) The cost of servicing a customer as a percentage compared to company or industry norms.
C) The cost of servicing a customer calculated as a percentage of the customer's gross margin, examined over several years.
D) All of the given answers
Customer Profitability
The profit that a company makes from serving a particular customer or client group over time.
Gross Margin
The difference between sales revenue and the cost of goods sold, representing the profitability of selling inventory.
Servicing Cost
The costs associated with maintaining and repairing products or equipment, contributing to the total cost of ownership.
- Understand how to analyze customer profitability accurately.
Verified Answer
AC
Andriana CampbellMar 10, 2024
Final Answer :
D
Explanation :
All of the given answers are appropriate ways to analyze customer profitability. Option A considers the cost of servicing a customer in relation to their gross margin which can help identify whether the customer is a profitable one. Option B compares the cost of servicing a customer to company or industry norms which can provide insight into how well the business is managing its resources. Option C examines the cost of servicing a customer over several years in relation to their gross margin which can help identify changes in profitability over time. A combination of these methods can provide a comprehensive analysis of customer profitability.
Learning Objectives
- Understand how to analyze customer profitability accurately.