The experience of working in different countries and industries has allowed BiCon to develop a methodology to identify the appropriate way to distribute the cost structure and resource expenses towards main business variables such as: channels, customers and products.

The general objective is to obtain better clarity and transparency of the company’s resources consumption pattern by these business variables.  This allows clients to identify  more precisely sales and marketing costs, the cost to serve clients in different channels and the cost of retaining and/or keeping the best customers.

The benefit lies in the identification, minimization or elimination of cross-subsidies caused mainly by the classic form of proration, which, in companies where resources are not consumed homogeneously by channels, services, products and/or customers, causes a significant distortion in the results often leading to wrong decisions.

In our experience, the variance can range from 5% to more than 80% in cost allocation.

Another important value is the identification of used and unused capacity of processing centers, customer service centers or internal service centers, as well as the total cost of ownership of productive assets. This makes it possible, for example, to manage the service or processing capacity of channels and to analyze the impact of customer behavior on business profit.

In the end, the decision makers will have current or historical information, but even more relevant, they will get projected results around the next 12 to 18 months to evaluate trends, business cycles, seasonality or any other criteria that impact the results and thus making much more solid decisions backed by real business facts.

Cost and profitability management benefits

Cost and profitability management typical business pains

An Initiative of Profitability Rolling forecast in your organization

The following diagram outlines a possible evolution of the Profitability Rolling Forecast Initiative for your organization, based on a Diagnostic Model and an automated Cost and Profitability Model.

At BiCon we design the evolution of the Initiative that best suits the pain, needs and reality of your organization.

A Diagnostic Model is an accelerated costing and profitability methodology oriented to results, which generates, from the perspective of management accounting, the results of the variables defined as the object of measurement, for example: channels, products and categories or customer segments. Implementing this methodology will allow you to quickly identify the benefits and impact of using models from a management accounting perspective.