Nancy Sanchez, vice president of marketing for Priced Right Office Supplies, recently attended a management training seminar where the instructor made the following point:
All customers are not the same—some are highly profitable and some are marginally profitable at best. To be successful, companies need to analyze the profitability of customers. Marginally profitable customers should be charged increased prices or their business should be dropped. The highly profitable customers—those are the ones you want to focus on. Direct your marketing campaigns toward them and you'll be on your way to achieving major increases in shareholder value!
Driving home from the seminar, Nancy thought about what she had learned and changes that needed to be made at Priced Right. In particular, she thought about her company's approach ...