How do you determine a customer's profitability?
Asked 4 years ago
Is there a specific formula I can follow to calculate the profitability? Also, what do I do if I want to do a segmented calculation?
Timmy Marshall
Wednesday, February 16, 2022
Follow this formula to calculate the Customer Profitability Analysis (CPA ) ;
CPA= (Annual Profit) * (no. of years a customer stays with the company)
Annual Profit= (Total revenue of a customer in a year - Total expenses incurred to serve the customer in a year)
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