Marketing is an art to attract and retain customers, but not to any but profitable customers. Unfortunately, organizations often understand that 20 to 40 percent of their customers are unprofitable. Also, many organizations report the fact that their most profitable customers are not the ones who buy the most, but the average shoppers. Major customers require special service and get the biggest discounts, thus reducing the company's profits. The smallest customers pay the full price and get a minimum of service, but the expenses connected with the deals reduces the profitability they earn.
Average customers enjoy good service, pay almost the whole price, and in many cases prove to be the most profitable. Therefore, a number of large organizations, which initially target only large customers are then orientated towards the average customer market. An organization should not pursue and satisfy every client. Orientation should be to cost-effective customers. This in turn requires the definition of a „cost-effective customer“. A cost-effective customer is a person, a household, or a business that earns revenue over a certain period of time, and the contribution is higher than the company’s expenses connected with attracting, persuading, purchasing, and servicing. Attention should be paid to the profits and expenses that the customer carries to the organization for a long time rather than a specific purchase.
Most organizations do not pay attention to the customer's profitability.
It is also appropriate to improve this activity by first applying a model of customer profitability analysis. One of the basic principles of customer return analysis, which the provider must implement, is to disclose and describe all the expenses, specific to each individual customer. A useful way to uncover these costs is to determine which expenses will be dropped if the customer is discontinued. Appropriate use of ABC is a differentiation analysis to identify which goods and services, which customers are more and which are less profitable for the organization, and depending on how to define the policy for serving different categories of customers and the sale of goods and services with different participation in sales and profits.
The present study explores the possibilities for measuring customer profitability, analyzes the connection- service’ expenses, a cost-effective client and presents the application of the ABC method - analysis to distinguish the customer service policy.
|Subjects||Social Sciences and Humanities|
|APA||Tarziev, V , Banabakova, V , Georgiev, M . (2018). POSSIBILITIES FOR DETERMINING CUSTOMER'S PROFITABILITY. International E-Journal of Advances in Social Sciences, 4 (10), 63-69. DOI: 10.18769/ijasos.415527|
|MLA||Tarziev, V , Banabakova, V , Georgiev, M . "POSSIBILITIES FOR DETERMINING CUSTOMER'S PROFITABILITY". International E-Journal of Advances in Social Sciences 4 (2018): 63-69 <http://ijasos.ocerintjournals.org/issue/36555/415527>|
|Chicago||Tarziev, V , Banabakova, V , Georgiev, M . "POSSIBILITIES FOR DETERMINING CUSTOMER'S PROFITABILITY". International E-Journal of Advances in Social Sciences 4 (2018): 63-69|
|RIS||TY - JOUR T1 - POSSIBILITIES FOR DETERMINING CUSTOMER'S PROFITABILITY AU - Venelin Tarziev , Vanya Banabakova , Marin Georgiev Y1 - 2018 PY - 2018 N1 - doi: 10.18769/ijasos.415527 DO - 10.18769/ijasos.415527 T2 - IJASOS- International E-journal of Advances in Social Sciences JF - Journal JO - JOR SP - 63 EP - 69 VL - 4 IS - 10 SN - -2411-183X M3 - doi: 10.18769/ijasos.415527 UR - http://dx.doi.org/10.18769/ijasos.415527 Y2 - 2018 ER -|
|EndNote||%0 IJASOS- International E-journal of Advances in Social Sciences POSSIBILITIES FOR DETERMINING CUSTOMER'S PROFITABILITY %A Venelin Tarziev , Vanya Banabakova , Marin Georgiev %T POSSIBILITIES FOR DETERMINING CUSTOMER'S PROFITABILITY %D 2018 %J IJASOS- International E-journal of Advances in Social Sciences %P -2411-183X %V 4 %N 10 %R doi: 10.18769/ijasos.415527 %U 10.18769/ijasos.415527|