Unprofitable Customers Analysis

Answering the question - Which of your customers are really making you money?

The tool for answering this question is a sortable list that ranks all your customers showing total revenue and all direct costs. This is usually a relatively easy report to produce provided you have easy access to your databases. Most computer systems can produce a list of customers along with the billing for any given period. The difficulty sometimes comes from figuring direct costs, but if you have produced the list in the Unprofitable Products and Services Analysis, then it's a snap to incorporate those costs in this report. These costs do need to be adjusted for any costs that specific customers create beyond the ordinary such as collection costs.

The problem for most of us is what to do with the results. You have probably spent a lot of money acquiring each of these customers which means that cutting them loose is not a very appealing thought. Rehabilitating them by fixing the process in which you deliver the service is one way of avoiding this. In the end, if they are costing you in lost profits you need to move past them. It's only fair that you devote your company's focus on the customers that are willing to pay for your products or services.