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ABC Customer Analysis
The ABC customer analysis divides the customers of a company into A, B and C customers. This structure is based on margin contribution and sales volume of each customer. The strongest customers in term of revenue fall into the category A, the weakest customers in term of revenue in the category C. The goal of the ABC analysis is to determine the customer’s value in order to reduce costs for C customers and on the other hand through intensive care of the A customers to achieve more profit in the long term.
Ideally, after the so-called Pareto principle, the A customers are 20% share of customer, which represent however 80% of its sales revenue.