What is 'customer profitability' in SAP SRD-CRM - CRM-Customer Relationship Management?

customer profitability - Overview

• Component: SRD-CRM

• Component Name: CRM-Customer Relationship Management

• Description: The revenues generated from a customer in excess of the costs incurred.

customer profitability - Details

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  Key Concepts: 
  Customer profitability is a term used in SAP Customer Relationship Management (CRM) to describe the amount of profit a customer generates for a company. It is calculated by taking into account the customer's total revenue, costs associated with servicing the customer, and any other costs associated with the customer. 
  
  How to use it: 
  In SAP CRM, customer profitability can be used to identify which customers are most profitable and which customers are not. This information can then be used to make decisions about how to best serve those customers and how to allocate resources. Additionally, customer profitability can be used to identify potential areas of improvement in order to increase profits. 
  
  Tips & Tricks: 
  When calculating customer profitability, it is important to consider all costs associated with servicing the customer, including overhead costs such as marketing and advertising. Additionally, it is important to consider any potential future costs that may arise from servicing the customer. 
  
  Related Information: 
  Customer profitability is closely related to customer lifetime value (CLV), which is a measure of the total value of a customer over their lifetime. CLV takes into account not only current profits but also potential future profits from the customer. Additionally, CLV can be used to identify which customers are most valuable and should be targeted for additional services or promotions.