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MANAGEMENT S T R AT E G Y MEASUREMENT

M A N AG E M E N T AC C O U N T I N G G U I D E L I N E

Customer Profitability Analysis

By Marc J. Epstein

Published by The Society of Management Accountants of Canada, the American Institute of Certified Public Accountants and The Chartered Institute of Management Accountants.

N OT I C E TO R E A D E R S

The material contained in the Management Accounting Guideline Customer Profitability Analysis is designed to provide illustrative information with respect to the subject matter covered. It does not establish standards or preferred practices.This material has not been considered or acted upon by any senior or technical committees or the board of directors of either the AICPA, CIMA or The Society of Management Accountants of Canada and does not represent an official opinion or position of either the AICPA, CIMA or The Society of Management Accountants of Canada.

Copyright © 2000 by The Society of Management Accountants of Canada (CMA Canada), the American Institute of Certified Public Accountants, Inc. (AICPA) and The Chartered Institute of Management Accountants (CIMA). All Rights Reserved.

No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, without the prior written consent of the publisher or a licence from The Canadian Copyright Licensing Agency (Access Copyright). For an Access Copyright Licence, visit www.accesscopyright.ca or call toll free to 1-800-893-5777.

ISBN: 1-55302-141-X

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C U S TO M E R P RO F I TA B I L I T Y A N A LY S I S
INTRODUCTION In Charlotte, North Carolina, the customer service center of First Union Corporation, the sixth largest bank in the United States, handles 45 million calls per year. The center’s computer system, “Einstein”, determines the ranking of a customer – profitable or

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