Brindle Corporation is considering an initiative to assess customer profitability. The company’s CFO, John Bradley, stated his position as follows: “I strongly suspect that some of our customers are losers—in other words, they’re not covering product costs and service costs. Think about our Weston account. Weston places a ton of small orders, and they’re always asking us to expedite them. Then our accounting department has to follow up because Weston misplaces billing records, which really slows down their payments. We’re going to make a $1,000,000 investment in CRM [customer relationship management] software to help us assess customer profitability, but I’m confident that the investment will really pay off when it helps us identify this type of loser customer.”
The position of the company’s marketing vice president, Jerry Brown, is quite different” This $1,000,000 investment is a waste of money. We’ll go through the exercise and find out that some customers are more profitable than others, but we’re not going to change a thing. Even the less profitable customers make a contribution to covering overhead, and we’re not going to drop a single one.”
Write one or two paragraphs elaborating on the arguments of the CFO and the marketing vice president. In your discussion, consider the fact that the bonus compensation of the marketing VP is based on sales volume. Could this be influencing Jerry’s position?