Prioritizing customers in busy manufacturing business

 

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Prioritizing customers in busy manufacturing business

Do you use any prioritizing scheme of your customers or you treat them equally and each of them is the same important to you? For example you have 10 customers who makes you 100k monthly and 10 that makes just 1k. Would you stop selling your production to the smallest ones or not?

Prioritizing customers in busy manufacturing business

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3 Replies to “Prioritizing customers in busy manufacturing business”

  1. Management accounting is important to understand customer profitability.

    Sometimes raising prices is the answer.

    Sometimes you prioritize certain customers.

    But generally speaking, if there is a constraint, then you have to prioritize.

  2. It’s complicated – you can’t be all things to all people, and when you are production or resource constrained you do have to make decisions on what can get done each month.

    However… immediate profit is not always the only consideration. It’s important no doubt, but so are other things.

    In my business (software, not manufacturing) we have a very wide spread of customers, from the $100’s/month to $10,000/month. They are all important to me – they are just trying to do their jobs, pay bills and help their customers out, and we are an important part of their systems.

    If we chose to not work with them, then it would make their lives that little bit harder, and I’d rather see as many people succeed as I can – my staff, my larger customers and my smaller ones.

  3. A typical way to improve profitability is to annually top grade your customers (and staff). By doing this, you increase the “average” of your customer base over time.

    Commonly, profitability is the metric used in top grading customer accounts. To do this properly, you need to understand both the gp% by customer and also their impact on overhead (e.g., some accounts are high maintenance for your accounting team).

    That said, phase one is usually to focus strictly on gp% by account, eliminate the bottom 10% customers, and use that returned capacity to increase sales to existing accounts and to onboard new accounts.

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