Customer profitability
Our biggest customer is growing. Why is less and less left from them?
We set the biggest customer’s revenue against the cost of working with them: discounts, order changes, express deliveries and service time.
30 minutes, free.
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Illustrative example on fictional data: five customers ranked by revenue and by the amount that remains after cost of goods and the cost of working with them. Customer A has the largest revenue, PLN 1,200k, but PLN 150k remains, or 12.5% of revenue, and it drops to third place. The cost of working with A is 46 order changes (PLN 46k), 18 express deliveries (PLN 54k) and 380 service hours (PLN 50k), with an 8% discount.
The amount after cost of goods and the cost of working with the customer, before fixed costs. Service time is sometimes not recorded; then we mark it as missing or estimate it with your team as a hypothesis.
In this example
- Which data we compare
- Sales and discounts per customer, order changes, deliveries including express, claims and returns, and service time.
- What can be established
- How much remains from each large customer after the cost of working with them, and what makes up that cost. Where data is missing, we say so plainly.
- What you get
- A picture of how profitable serving the customer is, and data for a conversation about price or terms.
Questions that keep coming up
- Which large customers are least profitable after the cost to serve?
- For each customer we calculate the amount after cost of goods and the cost of working with them, not revenue alone.
- What if nobody records service time?
- We mark it as missing. We can estimate it with your team as a hypothesis or start collecting it; we do not enter zero.
- How do we prepare for a conversation about terms?
- We put the full cost of working together in one view. It shows which terms matter most: minimum batch, express surcharge or the number of order changes.
Want to check customer profitability yourself after changing the terms? See TORIS
Let’s check it on your customers
On the initial call we will agree which data to compare and where to start.
Tomasz Pijanowskifounder of ToruAI
30 minutes, free.
Prefer to write? Send a message