Customer profitability analysis within the remote gaming sector

Abstract

Purpose: This dissertation combines customer profitability analysis (CPA) with the remote gaming sector with the ultimate aim of exploring the different approaches to CPA of Remote Gaming Companies operating in Malta by determining the different methods of cost and revenue allocations as well as the customer segmentation models of such companies. Design: With regards to methodology, semi-structured interviews were conducted in order to collect the relevant data. The interviewees consisted of Finance personnel working at remote gaming companies and a consultant from a services provider firm who specialises in the remote gaming industry. Findings: The findings revealed that all companies perform CPA and consider it to be an essential management accounting tool. CPA is most commonly performed on a customer segment level, mainly due to the difficulties encountered when allocating indirect costs to the customers. Customer segmentation is a crucial way of how remote gaming companies can target their future customers, with geographic location being the most practical segmentation model. Customers are the core of remote gaming companies, where both acquiring new customers and retaining the current ones are of significant importance. Conclusion: While not all companies analyse their customer profitability in the same way, they do evaluate their customer data frequently and in detail, which enabled them to understand their customer base and their needs, ultimately increasing the overall profitability, resulting in rapid growth as in the case of many of the participant companies. Value: This dissertation adds to extant literature regarding CPA as well as provides recommendations which, it is hoped, to help remote gaming companies to increase their overall profitability and operate in a more efficient manner.