Customer Profitability and Targeted Growth
The Mead Consulting Group utilizes a proven process to help clients identify and focus on those existing customers and new customer targets with the most strategic potential and greatest opportunity for profitable growth.
MCG clients have seen as much as a 40 percent improvement in net profitability in the first year. And most importantly, clients achieve results without significant capital investment.
Companies typically look at customer data on a gross profit basis. They can't see which customers are most profitable on a net profit basis . . . and which new revenue prospects are the best to target. In fact, as revenue goes up, not only may the rate of profitability decrease, but overall profits may actual come down.
Click graph to view a larger image
The above graph illustrates a very typical distribution of net profitability by customer. Tier 1 (profitable customers) constitute 15-20% of the total number of customers and generate 200% to 900% of the total profits. The Tier 2 segment which comprises 60%-70% of the total number, is essentially break even. The Tier 3 segment which includes 10% -25% of the number of customers contains unprofitable customers that lose 100% to 800% of the total profits.
Since companies cannot differentiate customers by profitability they are unable to tailor products and services to customers according to profitability.
The MCG Targeted Profitable Customer (TPC) GrowthTM process
MCG utilizes the TPC GrowthTM process - a process designed to help clients identify profitability on an individual customer basis and develop strategies for each customer.
- Improvement in both short term and long term profitability and company value.
- Resources are focused on the most profitable customers and new revenue targets.
- Increases in the efficiency of customer acquisition and retention investments.
- Development of capabilities to be proactive in good as well as difficult economic times.