Gartner Research

Customer Profitability Assessment (Beta)

Published: 07 December 2014

ID: G00386193

Analyst(s): Procurement Research Team

Summary

Suppliers increasingly evaluate customers based not just on revenue or even gross-margin, but on cost-to-serve. Customers who reduce non-value added burdens placed on suppliers—such as erratic order behavior, overly rigid service level specifications, and poor inventory and payables management—receive greater resources and, in some cases, preferred pricing. Beta Company* shares a comprehensive list of cost-to-serve drivers that their sales force uses to help prioritize and even "deselect" unprofitable customers. For Procurement, these drivers represent important levers for improving supplier relationships and gaining a competitive advantage vis-à-vis other customers.

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