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111.10.02 Epic - What is Customer Accounting

What is Customer Accounting?

Definition

Customer Accounting is the combination of customer analysis and accounting analysis.
- 108.20 Data Analysis - Customer analysis = All revenue and profits a company generates come from customers. Customer analysis is designed to answer questions about customers and their environment so they can become more profitable.
- 108.60 Data Analysis - Accounting analysis = Explores how financial statement data and non-financial data can be linked to financial performance.
- Should especially have a focus on the accounting for individual customers or customer segments

Called Growth Accounting by Jonathan Hsu at Tribe Capital (formerly of Social Capital)
- https://so-epic.slack.com/archives/CNWMBJZHP/p1592601586001300
- https://tribecap.co/a-quantitative-approach-to-product-market-fit/

What is the goal of Customer Accounting?

If accounting is the ability to report and improve the financial health of a company over time, then customer accounting is the ability to report and improve customer health over time. And since we can link non-financial metrics to financial outcomes, we prove that improving customer health also improves financial outcomes.

Linking non-financial metrics to financial performance

20200630 Wharton Accounting Analytics << Week 4 is the key
- This is a really interesting concept, one that could be expanded upon, that I haven't seen anybody else talking about except this one Wharton Professor - and even then, I could not find any of his published papers that speak specifically to this topic.


So, what is Customer Accounting?

Customer Accounting is the measurement and improvement of customer health over time. Customer health is linked to financial outcomes.
- this is not sufficient by itself, because "customer health" needs to be linked to "financial health"
- Perhaps something more like:
- Customer health as it improves the business' financial health
- Linking customer health to financial outcomes.


Source:
  • Me