Brian Hoppe explains why your biggest client might be losing you money. A $100 million firm discovered its largest customer cost $500,000 more to serve than they paid. Without tracking profit by client, you can't see which accounts are actually draining cash.
I was talking to a guy who had been running this company over $100 million in revenue. Nobody had ever thought, okay, let's really measure margin by client. Their single largest client, they were paying $500,000 a year to do their service. They were paying the client, right? Oh. Cost them $500,000 more than the client was paying to actually deliver the service. That's a huge one. And then another one, Fortune 500 company, they were doing a managed service for that asked for a price concession and they said no. When they went back and looked after they had already lost the client, they were making 85% margin on that client and they said no. To the price concession. And so huge mistake on both ends. You can be way off if you're not regularly actually measuring, okay, what does it look like on a per-client, per-agreement basis in fixing those things when they happen?
