Customer Profitability Management

We help you improve customer profitability to achieve your profit targets by smarter pricing and better cost efficiency.​

Book a meeting

Customer profitability management focus on pricing and cost

 
To ensure profitable growth you need full transparency on your customer profitability. Focusing on topline is not enough and to fully manage your profitability you need to understand what customers and products are the most valuable to your business.

Pricing is the most efficient driver to increase profit but to improve overall profitability you need to manage both pricing and cost. We help you get transparency on your pricing models and discounting structure as well as tools to improve your cost to serve. ​

With increased visibility, we can revisit your pricing strategy and methods and plan pricing and discount models that allow you to steer your business and make the most profitable decisions concerning your customers.

Jan Lindgren 11-1

There was a clear need to get the structure and rules for customer contracts in order to see how discounts affect our profitability.

Jan Lindgren, Country Sales Director
Tikkurila Sweden

Article

What is customer profitability, and how does it affect your business?

Asiakaskannattavuus

How customer profitability management affects your bottom line?

Customer profitability - focus
Efforts directed to improvements that matter the most

Managing customer profitability relies on fact based and transparent understanding of your customer profit drivers. When your organisation is aligned on where and how you make money, it allows you to focus your improvement efforts on where it counts.

Customer profit
New pricing models speed up your profitable growth

With new pricing and discount models, you can better capture customer willingness to pay, accelerate growth, and direct demand towards a more profitable business.​

With visibility to cost drivers you can work to find new ways to package, sell, deliver, and service your customer with more focused cost to serve.

Customer profitability - cash flow
Permanently improved profit


Your pricing decisions have far reaching impacts. With the right understanding and dynamic tools, your sales organization is better equipped to argue your prices and offering. Combined with a clear understanding of your profit drivers, you can secure recurring profitability optimization with both price and volume.

What we do

See examples of what we actually do with different kinds of customer profitability related challenges.
Click the plus icon to see symptoms of the challenges, how to solve them, what the impacts are and related customer cases and blog posts.

Symptom
Sales is calling customers “strategic” and referring to their purchasing power

Solutions

  • Pricing is involved in negotiations – most importantly when preparing for those. Knowledge is power.
  • Putting the customer strategy into numbers – quantifying the financial impact of top-heavy focus with low contribution
  • Setting targeted price increase or moderating discounts as a goal for periodical customer negotiations
  • Challenging the customer to provide specific arguments why the quoted price is too high

Impacts

  • Improvement in profitability KPI’s
  • Strengthening trust between Sales and Pricing as a result of winning together

Related blog posts

Symptom
Responding to RFQ’s takes too long. This leads to some RFQ’s not being actioned and unwanted outcomes from the ones responded to

Solutions

  • Recognizing the fact that it’s better to have a good price today than a great price next week. Fast reply has value to the customer, and sometimes being (among one of them) fastest gives you an edge over the competition.
  • Improved visibility on RFQ’s to expect – and prioritizing accordingly
  • Measuring the time spent in bidding process steps
  • Developing tools to support making informed decisions, faster

Impacts

  • More and better prepared quotes sent
  • Increased sales
  • Improved customer relationship – more RFQ’s in the future – a positive spiral!

 

Symptom
Sense of customers choosing the “wrong brand” between alternatives in the range

Solutions

  • Creating a cross-reference database
  • Implementing a Good-better-best logic when quoting to customers
  • Pricing review within the category in question

Impacts

  • Improved margin (in absolute terms)
  • More satisfied customers – as a result of getting more value from the partnership

Symptom
Co-operation between sales, product teams and pricing isn’t optimal

Solutions

  • Clarifying the customer strategy – with whom to deal with, what products and what’s the competition
  • Moving away from “offering anything to anyone” - thinking
  • Asking for specific information from the customer and using it to re-negotiate cost prices
  • Increasing pricing transparency and creating channels for collecting market insight

Impacts

  • Lowering prices and increasing discounting as a response to customer comments eases out
  • More considered offer, less supplementing products and lower cost prices
  • Sales learn how to move away from discussing price but value instead

Related blog post
Arvoperusteinen hinnoittelu - mistä lähteä liikkeelle?

 

Symptom
Passing cost price increases to customers is not enough to support a stable margin

Solutions

  • Establishing advance notice to cost price adjustments
  • Increasing sell prices at the time of receiving notice, lowering the prices only if absolutely mandatory
  • Making sure the customer contracts include clauses for being able to review prices under legitimate circumstances

Impacts

  • Strengthening margin
  • Time spent on strategic questions instead of firefighting

How we work with you - From a business case to measured sustainable results

We work hands-on with our customers to build the insights, visibility and tools needed to improve capabilities, empower people and achieve measurable profitability improvement, now and in the future.

Read more about our Changemakers toolbox, project framework, and pricing on the How we work -page.

Book a meeting

 

Should we discuss how you could optimize your pricing and cost efficiency and achieve profitable growth?


Book a meeting from Antti's calendar or send us a message and let’s find out together!

 

Other services

Working Capital Optimization - Capacent

Working Capital Optimization

We help release cash from operations to finance your growth and strategic initiatives by optimizing your working capital.

Supply Chain Management - Capacent

Supply Chain
Management

We help you build and operate a supply chain that gives a competitive edge through increased agility.