- thus having a negative impact on company profitability. Often even managers who understand the issue are not able to easily distinct between customers belonging to these 2 groups. The size of customer is not a valid premise that the customer is automatically profitable, in fact the evidence suggests that even the largest customers may turn out to be the most unprofitable. Objective The main purpose of CPA is to provide to organization management with the understanding of each customer profitability. Grouping this information into customer profitability segments, allows the companies to take different, targeted actions and strategies against different profitability segments, having as a target increasing the company’s total profitability. Those companies that understand which customers are more profitable and which are not are “armed with valuable information needed to make successful managerial decision to improve overall organizational profitability”. CPA allows businesses to take the following key strategic decisions: Identify customers’ profiles; Differentiate customer service activities depending on customer profile (e.g. highly-profitable customers could receive more attention, to ensure high-level satisfaction and loyalty, in order to protect continued business relations); Differentiate marketing strategy, depending on customer profile (e.g. implement more aggressive and expensive marketing strategies to high-spenders, while limiting the marketing costs against customers, who spend little and show few signs of spending more in the future); Take actions, to maintain or increase customers profitability, including turning unprofitable customers into profitable ones (e.g. decreasing cost to serve, of looking for ways to increase revenue, up to ceasing business relations with unprofitable customers to cut the costs). Input information Calculation of customer profitability takes into account both revenue associated to each customer, as well as all costs which can be attributed to the customer. Revenue associated to the customer Revenue differences across customers may differ due to various reasons, including: Differences in price charged for a unit a product or service to different customers; Differences in volumes sold to different customers; Differences in product or service specification delivered to different customers; Other one-time events, such as bonus events, not directly related to a particular sale transaction. CPA requires a company to associate all company's revenue to different customers (sources of revenue), in order to find out revenue associated to each customer. Companies most typically have no trouble finding out the amount of revenue attributed to a particular customer, thus article will not cover this aspect. Costs associated to the customer