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Analyze Customer Profitability


Why should you be concerned about individual customer profitability?  If overall profits are good, why be concerned about the details?

Possibly to answer more direct questions about customers, such as:

  • Should sales push for volume or margin with a particular customer? What impact does this have on total profits?
  • Does sales volume justify the discounts, rebates, etc., given to certain customers? Would you lose the customer if not offered?
  • What actions can we take to influence customers to act more profitably?

sales-vs-profitDo you have the tools to answer these types of questions in an effort to improve overall customer profitability?  Most businesses rely on the traditional system reports and spreadsheets that capture customer sales and profit information.  However, is this enough?

DVA can enhance the analysis of this data by offering visualizations that combine data from multiple sources – company’s billing, shipping and sales reporting systems, as well as the customer data – to deliver a simple, flexible view of the business and customer profitability. The end result is an insight-to-decision process that is swifter than just using traditional system generated reports alone.

The analysis that follows illustrates the use of Tableau in visually analyzing customer sales and profit data for a fictitious company. In this case, the company has been experiencing a decline in profits while sales have been growing. The images below taken from the analysis  highlight what sales and marketing can see using Tableau. In addition to the images, the following provides some key steps and explanations of what is entailed in constructing the analysis.

STEPS TO BUILD Customer Profitability Analysis

Steps analyzing why customer profitability has been declining:

  • Connect to Customer data for past nine months
  • Pull data elements onto the Tableau canvas
  • Convert table summarizing total sales and profits by customer
  • Identify any customers with negative profits (no customer with negative profits)

Steps analyzing profits per order:

  • Drill down into the totals to see individual order detail
  • Display order profitability by customer graphically
  • View and select orders with negative profits for further analysis

Steps identifying customers with negative profits by order and any shipping delays:

  • Display customers with the most orders with negative profits
  • Test orders for delays using Shipping KPIs (BAD indicating delays)
  • Observe KPIs indicating little correlation with negative profits

Steps analyzing possible excess discounting corresponding to profitability issues:

  • Use customers with negative profits by order to investigate discounting practices
  • Color code profits (darker color greater the profit loss) and box size to represent discount size (larger the box, greater the discount)
  • Observe correlation between excess discounting and profit loss per order

STEPS TO BUILD Customer Profitability Dashboard Views

Steps taken to create Customer Profitability Dashboard:

  • Display Profit Ratio per Shipment ID and its corresponding Profit value
  • Add color coding for Profitability KPI (Profit Ratio >20% GOOD, >10% but <20% OK, or <10% BAD)

Steps taken to create Customer Profitability Dashboard:

  • Display customer’s total profit contribution as a percentage and its Profit Ratio
  • Add color coding for Profitability KPI

Steps taken to create Customer Profitability Dashboard:

  • Display Cost, Bill Amount, Profit and Profit Ratio for each customer’s shipment
  • List customer’s Shipment ID in descending order
  • Add color coding to Bill Amount, Profit and Ratios by Profitability KPI

STEPS TO Integrate Views into Profitability Dashboard

Complete Customer Profitability Dashboard:

  • Place the three previously shown worksheets onto dashboard canvas
  • Link Profitability Per Shipment and Profitability Details views to the selection of the customer in the Profitability by Company List
  • Add search function for individual Shipment IDs


profitabilityThe benefit from visually monitoring sales and customer profitability information is easier identification of the profit-lift potential from customers and then initiating smarter decisions and actions based on the results from the analysis.

Each company’s circumstances are different. The point is being proactive in terms of improving customer profitability by analyzing current experiences versus established KPIs and making concerted efforts to address any issues and needs.

Ready to see how Data Visual Analysis helps businesses? Request a live demo using your company’s data by completing this form. One of our consultants will follow-up with you via email.

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