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Identifying Profitable Customers

If you were to ask your personnel to name your top five customers, who would they list?

Would they rank the top five based on volume, number of times they call, hassle factor? Or would they name them based on profitability?

Chances are that your personnel can’t identify your most – or your least - profitable customers and in this tough economy, it is imperative that you devote your resources to the former.

Scott Stratman, founder of The Distribution Team, has an insightful article on a simple approach to figuring out who your most profitable (and least profitable) customers are. As Stratman says, “Since all of your cash is tied up in inventory and accounts receivable, quit spending money on losers and start allocating it on the winners in your customer base.”

Click here for the article.

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Tribute, Inc. is a provider of ERP business management software for distributors and system integrators in the fluid power, hose, motion control, automation, fluid handling & pump industry who provide value-added services.