Authors: Øyvind Helgesen; Helge Mykkeltveit Sandanger; Joakim Sandbekk
Addresses: Department of International Business, NTNU in Aalesund, Norwegian University of Science and Technology, Larsgårdsvegen 2, 6009 Ålesund, Norway ' Finance and Controlling Department, Dekkmann AS, Breivollveien 31, 0668 Oslo, Norway ' PricewaterhouseCoopers (PwC), Dronning Eufemias Gate 8, 0191 Oslo, Norway
Abstract: The purpose of this paper is to study the relationships between the extents of use of customer profitability analyses (CPA) and business performance. In addition to CPA as an overall construct, five methods are included: 1) CPA of individual customers; 2) customer segments; 3) assessments of customer lifetime value; 4) valuations of customers; 5) customers as investments. A total of 437 large Norwegian companies were invited to answer a questionnaire, of which 171 participated giving a response rate of 39%. CPA (overall construct) is positively linked to business performance. CPA of individual customers is the only method that significantly drives business performance. Thus, conducting detailed customer profitability analyses to establish reliable customer profitability accounts appears to be worth the effort. The respondents perceive the three forward-looking methods, i.e., (3), (4) and (5) as variations of one approach. Analogous studies are highly recommended. Cost estimation methods could also be addressed.
Keywords: business performance; customer accounting; CA; customer accounting profitability; CAP; customers as investments; customer profitability analyses; CPA; customer segments; customer lifetime value; Norway; valuation of customers.
International Journal of Managerial and Financial Accounting, 2018 Vol.10 No.4, pp.352 - 377
Available online: 26 Oct 2018 *