In a highly competitive environment, the banks seek to expand its customer base of banks by winning new customers as well as retain existing customers, but it is not necessarily that the large amount of customers can help to improve the profitability
of the bank, there may be customers contribute to increase profits and others may cause more losses, which necessarily calls to customer profitability measure for the best understanding of the different profit's resources in the bank. Then the problem of indirect costs allocation to each customer appears, and then the need to rely on Activity Based Costing system (ABC) in order to determine the exact cost of each customer. The strength of this system appears from its philosophy which based on that the activity is the real consumer of bank's resources and the bank customer is the one who consumes this activity and that leads to improve the tracking and tracing of cost elements to each bank's customer in the end.
The main objective of the research is studying ABC 's role in customer profitability measure, and the role of this accounting in providing necessary information to achieve the optimal mix of customer in order to maximize profits.
This study has been applied to Commercial Bank of Syria in Lattakia-second branch as a case study, in order to measure customer profitability in the reality using the Activity Based Costing.
This study found that the use of Activity Based Costing is more accurate than the traditional system in the banking customer profitability measurement and then a greater possibility of discrimination between the profitable customer and the unprofitable customer, and that in the absence of the applying of customer profitability accounting in the bank.
This study deals with the application of the role of customer profitability analysis
from a cost approach that aids the company rationalizing its managerial decisions.
The target of this study has also been to assess the ability of the customer
pr
ofitability analysis approach to furnish additional cost information to the
organization that uses this approach in comparison with the traditional cost
approaches. Consequently, ensuring of contributive factors of this assessment in
rationalizing the managerial decisions.
Accordingly, an empirical study has been applied in the educational services
companies in Syria, where an enormous importance is laid upon the customer, and
where the competition percentage is high among the companies offering educational
services. A huge importance is laid upon the managerial decisions which enable the
company to gain and retain the most profitable customers. The study has proven
effective in following the customer profitability analysis approach in the educational
services companies. Furthermore, it has also proven the contributive factor of
rationalizing managerial decisions regarding the customers, who stand for the
profit resource of such companies in the long term.
