The Incidence and Perceived Managerial Merit of Customer Accounting in New Zealand

Abstract

Purpose -Two prior survey papers on the use and perceived merit of customer accounting (CA) practices, one in Australia and one in New Zealand (NZ), disclosed contrasting results with confusing elements. The purpose of this paper is to replicate and extend previous survey research in order to update and clarify our understanding of CA practices in NZ.Design/methodology/approach -Within a contingency theory framework, a mail questionnaire survey is used to measure the use and perceived merit of CA practices in NZ and investigate their relationship with six contingent factors: competitive strategy, market orientation, environmental uncertainty, costing methodology, company size and industrial sector.Findings -Mean CA usage and perceived merit scores in NZ in 2009 are much higher than was found in NZ in 2007 and similar to those found in Australia in 2002. A significant gulf between usage rates of historical and forward-looking CA measures is now found in NZ. There is strong evidence for a positive contingent relationship between the marketing concept of marketing management and both the use and perceived merit of historical CA measures. Also found is a significant positive relationship between the customer concept of marketing management and the use and perceived merit of customer profitability analysis at the individual customer level.Research limitations/implications -The survey method used prevents follow-up questions and clarification of ambiguities, but the survey results do provide new insights and potential avenues for further research.Originality/value -This survey provides researchers, teachers and firms using or considering using CA practices, with an improved understanding of current usage and perceived merit of CA practices in NZ companies. CA usage and perceived merit. Disciplines Business Page 1The incidence and perceived managerial merit of customer accounting in New Zealand Abstract Purpose -Two prior survey papers on the use and perceived merit of customer accounting (CA) practices, one in Australia and one in New Zealand (NZ), disclosed contrasting results with confusing elements. This survey replicates and extends the previous research to update and clarify our understanding of CA practices in NZ.Design/methodology/approach -Within a contingency theory framework, a mail questionnaire survey is used to measure the use and perceived merit of CA practices in NZ and investigate their relationship with six contingent factors: competitive strategy; market orientation; environmental uncertainty; costing methodology; company size and industrial sector. Research limitations/implications -The survey method used prevents follow-up questions and clarification of ambiguities, but the survey results do provide new insights and potential avenues for further research.Originality/value -This survey provides researchers, teachers and firms using, or considering using CA practices with an improved understanding of current usage and perceived merit of CA practices in NZ companies.

The role of organizational culture in the adoption of customer profitability analysis: a field study

“…Guilding and McManus (2002) developed a list of five dimensions of CA, which include CPA, lifetime CPA, customer segment profitability analysis, valuation of customers or customer groups as assets and a broad categorization of all other CA techniques. Our paper addresses the CPA dimension of CA because several studies have determined organizations are more likely to use CPA over the other four CA dimensions (Guilding and McManus, 2002;Lord et al, 2007;Tanima and Bates, 2015), and we wish to investigate why organizations fail to implement CPA despite the belief it provides managerial benefit.…”

“…Although the accounting literature addressing customer profitability issues has increased, research remains thin and is largely descriptive or normative in nature (Tanima and Bates, 2015;McManus and Guilding, 2008). Some techniques were introduced and discussed within both marketing and management accounting literatures (Gleaves et al, 2008).…”

“…Of all CA techniques, CPA has received the most management accounting research attention, largely because it is the CA technique most often adopted and deployed by organizations (Guilding and McManus, 2002;Lord et al, 2007;McManus and Guilding, 2009;Tanima and Bates, 2015). CPA may strengthen the decision-making process for managers by providing a taxonomy of customers based on profitability and growth potential (Al-Mawali et al, 2012).…”

“…Kaplan and Cooper (1998, p. 181) suggest that managers with activity-based costing (ABC) instrumentation can, "dramatically improve their profitability, especially in industries where their competitors do not understand the economics of their customer relationships". Despite the benefits Al-Mawali et al (2012), Shapiro et al (1987) and Kaplan and Cooper (1998) suggest CPA provides, researchers have discovered a significant gap between the usage rate of CPA and its perceived managerial merit (Guilding and McManus, 2002;Lord et al, 2007;Tanima and Bates, 2015). For example, Tanima and Bates (2015) found CPA mean usage to be 4.55 but its perceived managerial merit to be 5.59 on a seven-point Likert measurement scale.…”

“…Despite the benefits Al-Mawali et al (2012), Shapiro et al (1987) and Kaplan and Cooper (1998) suggest CPA provides, researchers have discovered a significant gap between the usage rate of CPA and its perceived managerial merit (Guilding and McManus, 2002;Lord et al, 2007;Tanima and Bates, 2015). For example, Tanima and Bates (2015) found CPA mean usage to be 4.55 but its perceived managerial merit to be 5.59 on a seven-point Likert measurement scale. The difference between CPA usage and CPA perceived managerial merit remains largely unexplored in managerial accounting literature.…”