Elimination of Unattractive Customers Examples

Elimination of Unattractive Customers Examples

Example 1: The pruning of less profitable accounts has generally had a positive effect on Prosource's operating profits, since the company has reduced variable costs and freed up additional capacity that could accommodate the growth of higher-margined accounts. That program eliminated 604 restaurants and $74 million of 1995's revenues from the customer base. (Year1997-SIC 5141)

Explanation: Prosource eliminated a number of Non-Core Customers and improved its overall profit position.

Example 2: As PageNet raised prices, it found that it lost some volume, but the customers who left were not profitable. So the bottom line improved. At the same time, it freed up space on the network for more profitable service. (Year 1998-SIC 4812)

Explanation: PageNet eliminated Non-Core Customers by raising prices to them.

Example 3: JC Penney's Arizona brand and Sears' casual wear lines mirrored Eddie Bauer's look but with lower prices. Bauer and Spiegel lost market share. In further cost-cutting efforts, less-profitable customers were dropped from mailing lists. (Year 1995-SIC 5600)

Explanation: The catalog company eliminated some of its Non-Core Customers to improve its overall returns.

Example 4:Bankers Trust was doing poorly. It sold off its retail banking and credit-card operations; it stopped making unprofitable loans to blue-chip corporate customers. Now successful, "a hot bank." (Year 1988-SIC 6021)

Explanation: Banker's Trust eliminated some of its Non-Core Customer relationships.

Example 5: Some firms will exit from whole areas of business that aren't making money. Solomon Inc. practically dismantled its money-losing Phillip Brothers commodities unit this year. Wertheim Schroder bowed out as a primary dealer in government securities. (Year 1990-SIC 6211)

Explanation: Both Solomon and Wertheim Schroder eliminated Non-Core Customers by eliminating entire businesses in which they operated.