Managing customer value is the title of a new Management Accounting Guideline published by CIMA, the American Institute of Certified Public Accountants and the Society of Management Accountants of Canada. The framework, known as the customer profitability management cycle (CPMC), offers guidance on how to analyze, measure and manage customer value to support the implementation of strategies that increase this value and thereby improve shareholder value. The customer profitability management cycle has five steps: 1. managing customer segmentation, 2. measuring customer margins, 3. managing customer lifetime value, 4. measuring customer impact, and 5. managing customer profitability. To turn strategies into action, companies must use the information provided by segmented customer profitability analysis to inform and support decisions. Metrics alone are not enough; they should be incorporated into incentive and reward schemes. Measurement, management reporting and reward systems must be aligned carefully.
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