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ARTICLE INFORMATION
Title in Romanian: Contabilitatea clientilor si analiza profitabilitatii clientilor in industria pe comenzi
– O abordare din perspectiva contabilitatii manageriale
Original title: Customer accounting and customer profitability for the order handling industry –
A managerial accounting approach
Year: 2006
Authors: Oyvind Helgesen
Institution: Industrial Marketing Management
Publishing house: Elsevier
Web address: www.sciencedirect.com

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ARTICLE CONTENT
Key words (1-5 words or expressions)
Customer profitability, order profitability, market-oriented managerial accounting ,market profitability

Main problems discussed:

-the profitability of an organization depends both on business profitability and customer
profitability
-customer –based and business-unit-based performance measures are important marketing
metrics for marketers and managers
-in order to have access to the correct information, both managers and marketers need a
managerial accounting system to supply them with relevant financial information
-the chosen context on which the study was made (the fishing industry in Norway)
revealed that , on the average, the profitability on the orders is on a modest level, the
“extreme” customers and markets have a lot to say with respect to profitability (that is, the
most profitable customer/market and the least profitable influence a great deal the overall
customer/market result)
-many businesses have come to the conclusion that only a small proportion of their
customers (20%) are profitable , and that the rest represent a great loss for the company;
without the unprofitable customers the profitability of the business would be
approximately doubled ; however, customers may contribute to the profitability of the
company at least by covering some of the indirect costs, even if the customer result of a is
negative
-decisions concerning the adoption of a marketing strategy should be based on customer
accounts for more than one period of time
-the managerial accounting system has 3 main objectives :to pay more attention to the
profitable customers, satisfying their needs and wants, to try to make the unprofitable
customers profitable and to eliminate the unprofitable customers.
-when introducing a market-oriented accounting system, the context of the business unit is
very important, one must consider the particularities of each industry
Main conclusions:
-Market-oriented business units have as objectives the satisfaction of their customers
needs and wants by offering the adequate and desired products at the right time and to
assure the business’s long –time profitability
-Marketing has the main purpose of delivering value to customers and manage customer
relationships in such a way that both the customers and the business are favoured
-Customer profitability is an important measure of market performance for decision
makers

RELEVANCE FOR ROMANIA

Aspects relevant for Romania

− Best practice examples
− Similar experience of other countries
− Relevant statistical data

During the last years ,in a large number of countries, including Romania , the customer
profitability issue as determinant part of a company’s profitability has been widely
discussed and debated . It has become acknowledged the fact that mostly, the satisfaction
of the customers and the proper allocation of costs are key-factors in achieving success as
an organization..
The importance of this matter is best revealed by the increasing number of people-oriented
companies , and , even if this is not the organization’s profile , nowadays one can hardly
find a company that doesn’t have a human relations, public relations or a human resources
department.
For instance, the dynamic A&D Pharma group. It comprises Mediplus Exim SA, the
biggest medicine wholesale distributor in Romania, and Sensiblu SRL, the largest network
of pharmacies in the country. The rapid development of the Mediplus company
was the result of a concerted effort to create a flexible structure that responded promptly
and professionally to customers’ and suppliers’ needs. In 1997 the first Sensiblu pharmacy
was opened in Bucharest as an experiment to demonstrate to the Mediplus contractors the
most efficient way of arranging the products in a pharmacy. The experiment was such a
huge success that in the following year the number of pharmacies
increased to 206. A&D Pharma group had a number of basic requirements.One was to
obtain a clear image of the financial planning and forecasting for different time periods
based on multiple simulations, as well as the real-time monitoring of the actual against
forecasted budgets. Another was to optimise the reporting, analysis, and data integration
processes into a flexible architecture capable of providing relevant information and
answer the questions most frequently asked by the management team: “Is our business
healthy? Are we on the right track? How can we increase profitability? How can we
improve cash flow? Who is our best client?”
Another relevant example is that of Cognos, an IBM company, which offers a
performance blueprint based on industry best practices for Customer Segment
Performance. It enables commercial, corporate, and investment banks to create profit-and-
loss statements at the customer segment level:
-Customer segment reporting, analysis, dashboards, and scorecards
-Initiative Planning
-Customer Segment and Large Corporate Customer P&L Calculation and Forecasting
-Activity-based costing and management

ARTICLE ASSESSMENT
Up to date Rank 1-5*
Argumentation Rank 1-5*