In almost all high-tech start-ups (and actually also in most Fortune 500 companies), profit aggregation only happens at business unit or company level and not at customer level. That is mainly because customer responsibility is in Sales. And Sales usually only cares about revenues because that is the key indicator they are measured on. Most managers do not see customer profitability as a priority because they make the false assumption that profits can be optimized by simply adjusting fixed costs (usually meaning human resources). However, understanding customer profitability is important for two reasons: If you have non-profitable customers it has an impact on your bottom line; in order to address this you have to know which customers these are … Read more
Sep 182011