![]() ![]() We’re going to count up these three ranks, and then it’s going to give us the best versus the worst customers. We have our Customer Sales Rank, Customer Profits Rank, and Customer Margins Rank. I’ve already broken down these calculations one by one in the table. So overall, our goal is to create an algorithm that will look across all these three variables ( Total Sales, Total Profits, and Profit Margins) to know who our top customers and bottom customers are. If you’re extracting a very high margin from a customer of lower volume, that customer can be classified as a good customer. This is because you need to evaluate the profits, where a customer who has produced smaller profits is probably better than someone who has produced a lot of sales. Sometimes, when we’re looking at one thing in isolation (like sales for example), it does not give us the complete picture. ![]() This number will tell us if a customer has been good or bad. The next thing to do is to create an algorithm within a virtual table that will give us that one number. Sales, Profits & Margins: Looking At The Bigger Pictureįor this tutorial, I’ve already covered the sales, profits, and margins. ![]() This way, you can gauge if a customer has been good or bad based on this one factor, instead of factoring in three to ten variables. But ultimately, you want to bring them back using just one variable.įor this to happen, you need to create an algorithm that enables you to analyze all these different variables and factors according to a dimension (which in this case are my customers).īut then you also want to bring it back to one number. There are instances where you will want to rank your customers across a number of different variables. Sales, Profits & Margins: Looking At The Bigger Picture. ![]()
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