Managing Customer Profitability And Economic Value
(10/6/2004) CRM Project Volume 5
By Gary Cokins, SAS
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Even when accurate revenue data is obtainable, knowing only the existing level of profitability for
a customer may not always be sufficient.
Estimating the ROI on purchasing equipment is near science.
In contrast, determining the ROI on some marketing programs
may be considered by some more of an art than science. Thus, a
large part of the marketing budget is typically based on faith that it will
somehow grow the business. There is a rumored quote from a company
president stating, “I am certain that half the money I am spending in
advertising is wasted. The trouble is, I do not know which half.” Senior
management has had unquestioned views that marketing and
advertising are things you must spend money on – but how much
money? How much is too much? Where should you focus for the
highest payback, and what should you avoid?
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