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Pricing Isn’t the Only Profit Lever

When pricing groups take the lead on customer profitability initiatives, there’s a tendency to focus almost exclusively on pricing and discounting as the key profitability drivers.

You know the old saying about having a hammer and seeing nails everywhere, right?

But while pricing is definitely one of the key profitability drivers, there are many more that you need to be paying close attention to.

For example, cross-selling and up-selling is a biggie…

Very often, customers aren’t as profitable as their peers because they aren’t buying the breadth of products that they really could be. They’re cherry-picking your product lines, and buying the rest of their spread somewhere else. Or, they aren’t buying as much of whatever they’re buying as they really could be, and you’re getting just a small fraction of their volume.

And of course, the biggest hit to customer profitability is customer defection—customers can’t provide any profit if they aren’t there, right?

So, a big part of any customer profitability management initiative should be about identifying the early signs of customer defection, taking steps to turn the situation around, and keep good customers buying from you for years into the future.

To enhance customer profitability, it’s important to remember that pricing—as powerful as it may be—is just one of many levers at your disposal.

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