Customer profitability is the profit the firm makes from serving a customer or customer group over a specified period of time, specifically the difference between the revenues earned from and the costs associated with the customer relationship in a specified period. According to Philip Kotler,”a profitable customer is a person, household or a company that overtime, yields a revenue stream that exceeds by an acceptable amount the company’s cost stream of attracting, selling and servicing the customer”. The purpose of the metric is to identify the profitability of individual customers (as opposed to total company revenue or average profit per customer) as some customers can indeed be unprofitable to maintain (wikipedia.org link)
Cover art by: https://www.productplan.com/glossary/customer-acquisition-cost/
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