Customer Profitability: Prospective vs. Retrospective Approaches in a Business-to-Business Setting☆

Abstract The research question pertains to the development of a comprehensive model of customer profitability. In developing such a model, we rely upon the links between quality, customer satisfaction, loyalty, and profitability established in the literature in marketing and accounting, and place them into the business-to-business context. We maintain that customer profitability is expandable in three directions, two temporal and one spatial. The two temporal directions, represented by retrospective and prospective approaches, are discussed and analytically specified. The third direction is conceptualized as an ever-growing customer pool of “delighted” customers that become an advertising medium for the firm and its products (services). Implications of the three-dimensional model of customer profitability for the management control system are offered.

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