Applying Time-Driven Activity-Based Costing (TDABC) for customer Profitability ranking

The quantification of customer profitability and the retaining the profitable customers are the core of the customer relationship management activities and a critical part of growing a successful business. This research aims to provide a framework for measuring and evaluating customer profitability, categorizing them based on their value to the business and ranking them according to priorities of customer retention in the business. We implement a customer profitability analysis using time driven activity-based costing and the k-Means algorithm for clustering customers based on the modified RFM method. Finally, in order to quantify the customer behavior and ranking them, we map customer clusters into four conceptual categories. This research is a case study of the Charcoal Burger Restaurant Franchise in the Zafar Street Branch from Early December 2014 until the end of May 2015. Customer’s clusters include of today's loyal customers, customers of competitors, loyal for tomorrow and ready to offer competitors.