Not all customers contribute equally to the value of a business. The Most Valuable Customer Analysis helps de-mystify and quantify the true value that each customer contributes. The ranking includes a business, strategic, and cost-to-serve valuation. An example RightSales™ customer valuation developed for a large chemicals company is presented in the graphic. The business valuation, strategic valuation, and cost-to-serve valuation of each customer is included. The results are compiled into a most valuable customer ranking. Those rankings are used to classify customers as A, B, or C customers. The Most Valuable Customer Analysis in the RightChain™ Portal ranks customers based upon a variety of business, strategic, and cost-to-serve factors. The screenshot is from a consumer products company serving distributors, large retailers, medium retailers, regional wholesalers, small retailers, and medium wholesalers.
We consider a variety of factors in determining the strategic value of customer including Purchasing Potential, Growth Potential, Channels Served, Innovation, Branded vs. Private Label, Loyalty, Geography, Marketplace Importance, SKUs Purchased that are Strategic SKUs, and Off-Season Activity.
Our customer value methodology takes the following factors into account when computing the business value of each customer: profit, profit %, profit contribution, profit per unit, sales, unit volume, % of occupied capacity, and profit per man-hour.
Cost to Serve
LRI takes into account many factors in calculating the true cost to serve a customer including time between orders, forecastability, average order size, order size variability, dock delays, seasonality, complementary seasonality, change order %, payment history, payment terms, return rate, service penalties, inventory commitments, handling unit requirements, order size, and packaging requirements.