Finding Your Lost Revenue with Pricing

On average, only a third of your customers contribute 133% of your profits. This means two-thirds of your customers either breakeven or lose you money. What are you doing about this?

For most companies, the answer is nothing. Most executives do not even realize this is happening. Imagine if 66% of your employees were not showing up to work. Think of the level of executive involvement there would be to address this issue. Why aren’t executives actively addressing the 66% of customers that breakeven or worse?

Reasons

There are two key reasons. Generally, in most companies, there’s very limited to no customer profitability analysis. No visibility means the problem doesn’t exist. Secondly, there is usually not a lot of knowledge about what to do if this visibility exists. Does getting these customers more profitable involve another cost-cutting drill? Those cost-cutting drills typically sacrifice the customer experience and leads to churn. Unfortunately, that’s the route many take.

Customer-Driven Alternative

However, there is a better way. A way that fuels revenue and profitability growth like gas to flames. The solution is in a detailed pricing analysis that uncovers costs, but also addresses the value your customers receive.

A pricing analysis typically involves a review of historical data for several years. That data become important in predicting possible pricing scenarios for the future. However, an important, but oft overlooked, data source is your company’s customers. They know the products and services you sell and can offer insights on how to improve the overall value delivered.

Through a series of customer-driven approaches, our clients quantify their ideal price point and change their customer profitability. They are able to better identify the ideal price drivers from the customers’ perspective. The result, as you imagine, is a significant change in the customer profitability.

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