Service 02

Some of your biggest accounts are your most expensive relationships.

Revenue is not profit. When freight, handling, returns, and service cost are fully allocated back to each account, the profitability picture changes materially — and the decisions that follow are very different.

The Problem

Gross margin by account is not true profitability. Most organizations never see the difference.

The distributor with $2.4M in revenue from a single account looks like a win — until cost-to-serve is fully allocated. Freight, returns, customer service touches, order handling, and dedicated inventory all have real cost. When those costs are attached to the account that drives them, net profit often tells a completely different story.

"On average, 12–18% of accounts in a B2B distribution portfolio are net-negative after full cost-to-serve allocation. Most leadership teams have never seen those numbers."

What We Deliver

True Net Profitability — Gross margin minus full cost-to-serve allocation: freight, returns, service touches, order handling, dedicated inventory
Customer Segmentation — Industry vertical classification (Industrial, Manufacturing, Trades, Healthcare, CRE, Government, MRO) with peer benchmarking
Profitability Scatter Analysis — Revenue vs margin rate by vertical — instantly surfaces accounts to reprice, restructure, or exit
Tier Misclassification — Accounts receiving Strategic terms while demonstrating Growth or Transactional behavior
Bottom Decile Action Plan — Bottom 10% flagged with rep, vertical, last order date, recommended action, and contract review trigger
Lifetime Value Modeling — Forward-looking CLV by segment to guide acquisition and retention investment decisions

Outcomes

What true profitability visibility produces.

12–18%

Accounts Typically Net-Negative

After full cost-to-serve allocation — across a typical B2B distribution portfolio. Most organizations discover this for the first time during this engagement.

200–400bps