The Customer Is King. Enthroned or In Exile? An Analysis of the Level of Customer Focus in Leading Management Accounting Textbooks

Abstract

In response to fierce criticism of irrelevancy and the need to adapt management accounting (MA) to fully support modern managerial priorities, there is a growing body of MA literature seeking to address the perceived weakness of customer-focused techniques and measures. This paper investigates the impact of this literature on mainstream MA textbooks and, by extension, teaching. The customer-focused content and, in particular, coverage of customer profitability analysis (CPA), is found to be relatively low in quantity and diverse in relation to the choice of techniques being discussed. No generally-accepted way of approaching this area is revealed, perhaps because it is so contingent on circumstances, and it seems that CPA is not yet part of mainstream MA. In the area of customer focus at least, there remain questions over the relevance of mainstream textbooks, teaching and, by further extension, the day-to-day practice of MA.

Keywords:

• Management accounting
• customer profitability analysis
• customer lifetime value
• customer concept
• customer-focused

Acknowledgments

The authors are grateful to the Editor for constructive comments and advice and, in particular, for pointing us to some remarkable and highly relevant sources from the 1950s and 1960s. We should also like to thank the three anonymous reviewers for their perceptive comments and valuable suggestions for improvements to this paper.

Notes

We found four index references to simply ‘profitability’ but none led to coverage of' customer profitability'. One related to discussions of ROI and other profitability ratios and the other three related to a marginal costing approach to segmental analysis.

The Atrill and McLaney index reference was actually to ‘strategic management’ but we included it as the index sub-section ‘strategic management, defined’ referred to a section titled ‘what is strategic management accounting?’ at the start of Chapter 11 entitled ‘Strategic Management Accounting’.