Week 9. American Investment Management Services
What is your opinion of the process the firm followed to assess customer profitability?
How would you use this information to improve your business?
Week 9: American investment management services
1. The process that AIMS follows to judge the level of profitability of its customers is quite appreciative. The process focuses on dividing all the customers into small segments based on the investments made by them, the age of the customers, and the trade activity involved. This helps the organization to be attentive toward its profitable customers and make the required decisions regarding unprofitable customers. It helps in identifying the actual reasons behind the unprofitability and thereafter taking the needed actions. It is next to impossible to individually asses costing for the millions of households who are customers in AIMS and that is why dividing them into 11 general categories have helped the company to apply activity-based costing properly. In my opinion, it is a very useful and efficient way to deal with a large consumer base and manage them in such a way that the distinction between the profit-realizingcosts consumers and the ones resulting in losses could be drawn. Each segment of the customers is further divided into Deciles which enables us to understand the differences in activities between high-ranking and low-ranking deciles and track the activities that do not realize profit. This could ensure higher profitability in the future for the organization. I find this strategy very apt because it helps in curbing the vast number of consumer base into simple segments.
2. I would like to utilize the information which is obtained from this analysis to the non-profit’s ing realizing activities and ensure proper decisions taken for their improvement. I would further use this method to group the customers into general categories so that corrective actions could be taken against the unprofitable activities. It is really important to understand the reasons behind the business activities that bring down the performance of the company so that the growth of the firm is never at stake. I would like to apply this strategy in practice to observe the positive changes in my current business. Segmentation is undoubtedly the most simple method to reduce complexity in any business and achieve high profit in less amount of time.