Author: Tom Pryor
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9 August 2013 - 23:27, by , in Activity-Based Cost Management, No comments
Great Input results in Great Output. While GIGO sounds like a Greek verb or an Italian food, it’s typically used as an abbreviation for Garbage In, Garbage Out. This familiar computer axiom means that if invalid, inaccurate or inappropriate data is entered into a system, the resulting output will be just like the input …....
9 August 2013 - 23:26, by , in Customer Profitability Analysis, No comments
According to Mae West, “There are no good girls gone wrong, just bad girls found out.“ “Good” profitable customers rarely become unprofitable. It’s more likely that they were unprofitable from the onset. Gross margin has been the traditional method of identifying “good” and “bad” customers. For example, if your overhead costs are 30% of gross...
9 August 2013 - 23:25, by , in Customer Profitability Analysis, No comments
Can you sell and distribute products at a mere 5% gross margin and expect to make a profit? Tech Data does. They make millions by only accepting orders that fit a specific profile. Ask yourself, “Can we do that?” Can you rank employees higher than customers and be a successful company? Southwest Airlines and Ritz-Carlton...
9 August 2013 - 23:24, by , in Customer Profitability Analysis, No comments
Are you still pricing your products or services to achieve a specific gross margin percentage. If your answer is yes, you had better watch out. Your competition may have just gotten smarter and switched to a more insightful method called Activity Based Cost pricing. Let me explain. Manufacturers, distributors and retailers have used for decades...
9 August 2013 - 23:23, by , in Activity-Based Cost Management, No comments
More is better. At least that’s the message the media has convinced us of during this century. Since the advent of the industrial age, we have been bombarded with the word “more”. It worked for everything … When our roads became crowed, we built “more” roads. When our cities became rampant with crime, we hired...
9 August 2013 - 23:23, by , in Activity-Based Cost Management, No comments
According to a 1998 Yankelovich survey, one in three adults said they would accept a smaller paycheck in exchange for a simpler lifestyle. It seems that more and more people are asking themselves, both personally and professionally, “Is more better?” A few years ago I witnessed a college class learn the cost of complexity versus...
9 August 2013 - 23:22, by , in Customer Profitability Analysis, No comments
The $50 menus are back on American Airlines. Menus that were eliminated five years ago are now back. Probably because airline management does not know what it cost to get a menu in the hands of the customer. I recently used some of my 3 million air miles to upgrade to first class. As we approached...
9 August 2013 - 23:21, by , in Customer Profitability Analysis, No comments
Are you red, yellow or green? If you do business with First Union Bank in Charlotte, North Carolina, the customer service department knows you by name, account number and by color … red, yellow or green.  When it comes to answering yes or no to a customer’s request for a lower credit card interest rate or to escape the bank’s $28 bounced-check fee,...
8 August 2013 - 23:50, by , in Strategic Planning, No comments
I was pulled over by a policeman while driving to a client’s site in Cleveland, Mississippi. “What did I do officer?” He replied, “You passed a car illegally.” “What was illegal about passing a stopped car?” I asked. “You used the shoulder of the road. That’s illegal,” he replied. “Officer, I’m from Texas. I didn’t...
8 August 2013 - 23:50, by , in Strategic Planning, No comments
The month my brother got his pilot’s license, I politely declined his invitations to go flying. Being a new pilot, Dick was trained to take off and land visually. He was not instrument certified. If unexpected fog, clouds or a storm should arise, he could easily become disoriented and crash. And as much as I...

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