Do You Really Understand Your Best (and Worst) Customers?

Most companies analyze financial performance by looking at geographic segments, product lines, or channels. These perspectives overlook the fact that aggregate revenues are dependent on individual customers, and that’s why analyzing the business by looking at its customers can provide managers with useful insights. This process, called a customer-base audit, can be a tool for businesses as they seek to answer five questions: Who are our best and worst customers? How is customer behavior changing? How does a cohort of customers change over time? How do different cohorts behave differently? And when you put the answers to these questions together, what do they suggest about the health of the business?