Managers’ jobs require them to analyze expenditures and their associated returns. Often, the problem arises along with internal turf battles in how to allocate costs of shared resources. For example, does an accounting burden get allocated by revenue percentage or time spent on various departmental work. If major account sales brings in eighty percent of company revenue, but only fifteen percent of the sales tickets, which proportion of the billing department burden gets allocated 80% or 15%?
Credit card companies just had their industry regulated. These financial services companies now have to decide: who receives annual fees, who loses grace periods, which big spenders are more valuable: those who charge a lot and pay off the monthly balance or those who pay high interest rates while carrying high balances?
As costs and profits are analyzed, the managers suddenly may have to start scoring their customers on a completely new and different perspective.
Consultants like us have brought our diverse expertise to companies and helped to study profitability from a new perspective.
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