Driving Greater Profitability Through Deeper Dimensionality
With only a view of gross profit by product category-level, a multinational telecommunications company has been inadvertently renewing loss-generating customers. Renewal discounts have been given without considering the complexity of the company’s asset-base in different regions and costs-to-serve at the service level. Without a more granular view of profitability by customer account, the company does not have insight into what really creates value and drives the business.
It’s likely your company can provide sales figures by product, geography or channel, but can your company properly allocate direct and indirect costs to arrive at gross profit or even EBITDA figures in the same dimensions?
Dimensional profitability models introduce a data driven approach to allocate costs to better match the multiple dimensions in which revenue is generated to give management greater insight and more granularity as to what really drives business value.
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