Customer Value Analysis

Customer profitability analysis provides valuable information to assess customer value. In addition, a business must consider other important factors when determining the appropriate action for each customer including:

• Growth potential of the customer

• Cross-selling potential of customer

• Growth potential of the customer’s industry

• Possible reactions of the customer to changes in sales terms or services

• The importance of having the customer for future sales references

A business can quantify the concept of customer value in what is called customer lifetime value (CLV), which uses the NPV concept explained earlier to determine the present value of all estimated future profit from the customer.

In this chapter you should have designed, shared, and made a plan to review your:

• Designed a Pricing Chart.
• Designed your Pricing System.