Customer Profitability Indicator Aggregation Across Business Divisions
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Solution Overview
Problem
Large companies with multiple divisions face difficulties in understanding the net impact of customer relationships across different business segments, leading to suboptimal decision-making due to lack of integrated profitability and risk analysis.
Innovation Solution
A method for evaluating customers by collecting and calculating division performance metrics across multiple business segments, generating customer division profit and risk indicators, and aggregating these to provide a customer business profit and risk indicator, which are then displayed for informed decision-making.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Ease of operation
If a customer is evaluated separately for each division, then division-specific decision-making is simplified, but the overall business cannot understand the net impact of customer relationships across divisions
Solution Approach 1:
The customer evaluation is segmented into division-level components (customer division profit indicator, customer division risk indicator) and then aggregated to the business level. This allows both division-specific analysis and overall business impact assessment to be performed systematically.
Solution Approach 2:
The patent merges division-level profit indicators and risk indicators into aggregated business-level indicators (customer business profit indicator, customer business risk indicator). This combining process enables the business to understand the net impact of customer relationships across all divisions while maintaining the ability to analyze individual division contributions.
2Device complexity
If only division-level customer data is collected, then data collection is simpler, but integrated profitability and risk analysis across the business is not possible
Solution Approach 1:
The data collection system is designed to capture division-level information that can serve multiple purposes: analyzing individual division performance, assessing overall business impact, and supporting integrated profitability and risk analysis. The same division-level data feeds into both division-specific and business-level indicators.
Solution Approach 2:
The patent adds an aggregation dimension to the data structure, transforming division-level data into business-level indicators. This dimensional change enables integrated analysis without requiring fundamentally new data collection mechanisms, as the business-level indicators are derived from existing division-level data through aggregation.
3Measurement precision
If division-level profit and risk indicators are calculated separately, then division performance is clearly understood, but the net business impact is obscured by multiple separate metrics
Solution Approach 1:
The patent combines multiple division-level metrics (profit indicator and risk indicator for each division) into aggregated business-level indicators. This merging reduces the number of separate metrics that need to be interpreted while maintaining the precision of division-level analysis, as the aggregated indicators are derived from the same division-level data.
Solution Approach 2:
The aggregated business-level indicators act as intermediaries that translate and summarize the multiple division-level metrics into a single business perspective. These intermediary indicators provide a clear view of net business impact without requiring decision-makers to process multiple separate division-level metrics simultaneously.
Data Source
AI summary
A method of evaluating customers is provided. The method is used for customers of two or more divisions of a business. The method involves collecting information indicative of the customer's influence on division performance metrics of several divisions of a business, where the division performance metrics each influence a business performance metric of the business. After it is collected, the information is electronically stored. The method includes the step of periodically calculating a customer division profit indicator for each of the divisions based on the information. The method also includes the step of periodically calculating a customer business profit indicator based on the customer division profit indicators, where the customer business profit indicator indicates a net influence of the customer on profits of the business. One or more of the customer division profit indicators and the customer business profit indicator are transmitted for display on a display device.