Maximizing Revenue: A Deep Dive into Product, Segment, and Country Analysis

Finance is often perceived as a department that only deals with numbers and budgets. However, it can provide valuable insights to the business beyond traditional finance activities. In my previous post, I talked about how finance can add value to the business. In this article, I will be focusing on product, segment, and country analysis.

Before we dive into the analysis, it is important to prioritize business objectives and track performance against targets. Given the vastness of businesses, the 80:20 rule (Pareto analysis) can be used to identify key areas for deep dives.

Product analysis is a crucial part of understanding business performance. Key questions that finance can answer include identifying the highest revenue-generating product, the segment driving the revenue, the location driving the revenue, the customer driving the revenue, and the margins. In the banking industry, we also look into product RWA.

Once the highest revenue-generating product is identified, a deeper analysis is required. By applying the principle of standard costing, we can break down each component. This includes changes in the number of units sold, changes in price, increases in revenue from existing or new customers, addition of new markets, and increase in unit sales in existing markets due to new customers, new variants in existing products, and seasonal factors based on historical trends.

For the banking industry, a deep dive includes changes in asset balances, changes in margins, and changes in non-interest income. The former includes adding new customers, adding new variants in existing products, additional balances from existing customers, and seasonal demand changes based on historical trends. Changes in margins include changes in the cost of funds and interest rates offered to customers. Lastly, changes in non-interest income include day count impact.

Segment and country analysis follow a similar approach. By understanding the performance of different segments and countries, the business can take corrective action for underperforming products and enhance the scope of top-performing products. The analysis also helps in understanding product penetration, where the higher the penetration, the higher the impact of changes on revenue.

In conclusion, finance can provide valuable insights beyond traditional finance activities. By focusing on product, segment, and country analysis, businesses can understand their performance and make informed decisions. Finance should be viewed as a strategic partner in driving business growth.