MODELING THE PROFITABILITY OF CUSTOMER RELATIONSHIPS: DEVELOPMENT AND IMPACT OF BARCLAYS DE ZOETE WEDD'S BEATRICE

摘要

Traditional management accounting systems are limited in their ability toprovide profitability information relevant to management decisions. Theproblems of inadequate profitability measurement are intensified in today'sbusiness environments, where changing margins due to deregulation and newentrants, new products with unknown costs, and customer sophistication inlocating low-cost providers often combine to leave unprepared firms withgrowing numbers of loss-making client relationships. In response, firms ina number of service and manufacturing industries are experimenting with newmethods for measuring performance, and are implementing these techniquesusing information systems. The collection and analysis of information on theprofitability of customer relationships enables managers to identify and defendtheir most attractive market segments, and to turn loss-making accounts intoprofitable ones. The London-based securities house, BZW, developedBEATRICE, an innovative information system that combines activity-basedaccounting principles and a model of customer profitability to make an incomeassignment to each of the 6,000 trades the firm makes in a day. The system'svalue is considerable, and can be evaluated by using industry performancebenchmarks, and by comparing management decision-making with thecurrently available information to what was possible with previous data.