Everyone heard about financial literacy. It starts with tracking one’s spendings, earnings, and calculating the profit. Over time we learn how to corb spontaneous spendings and make big purchases.
Companies undergo a similar transformation. They invest in their future entering new markets and opening offices in the new countries. Companies burn money to attract new customers and build internal processes. Experience comes with time as well as customers’ data: companies learn how to track spendings and earnings.
Tracking profit per client allows one to sort them in the order of profitability. Thus you will learn how many of the customers are unprofitable. One can increase profit by simply avoiding bad clients.
The cumulative plot provides an idea of max possible profit. The maximum value of a plot is your maximum possible profit, given that you avoid bad clients.
Yes, we do not know what unprofitable customers are beforehand. But we have data on the previous generations. Once your CRM system collects enough data, you can start predicting profit using data on previous generations. Sorting the clients in the order of predicted profit will give you an idea of lost profit.
Artel has developed similar models for Banking, Marketing, and Collection. Shoot us an email to discuss your case: firstname.lastname@example.org.