At Customers Think, they’ve addressed a common issue — why does customer profitability decrease as sales revenue increases? In today’s current economic environment, companies are trying to keep up sales, which often leads to special buying programs, prizes, rebates, and quality purchase discounts to sell to more customers. The customers who buy at this time are the customers who only buy when the prices are low, and rarely lead to a consistent profit. The price slashing cycle leads to the same number of products sold, but a decreased amount of revenue, creating a vicious cycle. Attracting new customers is necessary, but customers who do not turn a profit are problematic.
What do you think? Have you come across this in your customer base?