Accounting is from Mars, marketing is from Venus: establishing common ground for the concept of customer profitability

Marketing and Management Accounting (MA) have traditionally been seen as poles apart in terms of both focus and approach. Innovative developments in MA measures and increasing pressure on marketers to “prove” their worth, combined with technological advancements in database management are, however, contributing to a need for more effective synergy. An examination of the treatment and coverage of customer profitability (CP) in both the MA and
marketing literatures and in a sample of forty textbooks: (i) confirms apparent
synergy in CP research, (ii) identifies how each discipline approaches the subject
and (iii) examines similarities and differences in the approach to the measurement and management of CP. Both disciplines show a sporadic and variable interest in CP and there is still a long way to go in order to develop consistent definitions, language and application methods for the concept. The marketing literature shows confusion and contradiction in its understanding of this issue but does take an innovative approach to the subject. It advocates the measurement of future customer lifetime profit potential through two closely linked additional concepts – customer lifetime value (CLV) and customer equity (CE) both of which the management accounting literature largely ignores, perhaps highlighting the accountant’s inbuilt conservatism and reluctance to wrestle with these more creative and judgement based measures. A conceptual model is presented as a means to clarify the differences between CP, CLV and CE, and to establish a common “platform of understanding” both within and between the two disciplines in order that further research progress can be made.