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How do you determine a customer's profitability?

Asked 3 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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