Every customer pays the same rate card. Some of them cost twice as much to serve.

Most firms know their margin by product. Far fewer know it by customer, and the difference between the two is where the money tends to hide.

By Steve 5 min read
Abstract bridge artwork for Every customer pays the same rate card. Some of them cost twice as much to serve.

Two customers buy the same thing at the same price. One orders monthly in full quantities, accepts the standard lead time, pays on terms and calls twice a year. The other orders weekly in broken quantities, moves the delivery window, wants a technical answer before each order, returns a small percentage of everything and pays at sixty-five days. On the gross margin line they are indistinguishable. In the bank account they are not. This is one of the most reliable sources of unmeasured margin variation in small and mid-sized businesses.…

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