When was the last time your business had a health check? Probably not recently enough.
Customer retention is the most important investment a company can make. That's because the cost of acquiring new customers is far greater than the cost of maintaining existing ones. Once you've gone through the effort (and expense) of acquiring new customers, you naturally want to keep them.
But the thing is, there may be customers that are costing you more money than the revenue that they generate for your company. To keep that in check, let's take a look at your Customer Profitability.
A customer is considered to be profitable as soon as the Net Revenue generated (after returns) is greater than the Costs of Goods Sold associated with this customer's order. Before you dive into data analysis, let's ensure that we are on the same page.
|Profitable Customers||New customers whose net revenues (after product returns) are higher than the cost of goods sold.|
|%||Percentage of profitable customers compared to all new customers.|
|Unprofitable Customers||New customers whose net revenues (after product returns) are lower than the COGS.|
|%||Percentage of unprofitable customers compared to all new customers.|
|Total Customers||Number of all new customers.|
By default, Net Revenue's definition excludes Discounts, VAT, Shipping Revenue, and Returns.
Net Revenue definition can be changed in Company Settings, but please keep in mind that doing so will trigger a re-import of all your store's data that can take up to 24 hours.
Bring together all the data you are collecting about your customers and monitor your customer profitability to increase your customer's LTV and to improve your business's health. The report answers the following questions:
- With what percentage of your newly acquired customers do you actually make a profit?
- Do you have many customers who only buy heavily discounted products and thus only generate losses?
- How high is the percentage of your unprofitable customers and is there a discernible trend?
- Should you exclude unprofitable customers from certain voucher promotions and sales?
What You Need
For this report to work properly, the following data must be imported:
- Order ID
- Order Date
- Stock Keeping Unit (SKU)
- Items Sold
- Item Price
- Customer ID
- Product Returns
- Product Return Date
- Cost of Goods Sold
- Shipping Revenue
How to Get More Details
The percentage of your profitable customers is shown as a color-coded column chart followed by absolute figures. You can also compare the evolution of your Unprofitable Customers with the relative numbers underneath!
Boost your efficiency by using the general RX report functionalities.
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