Revenue generation ideas are hot topics right now.  But revenue generation doesn’t always mean greater profits.  Reviewing your revenue base is an important exercise that should be conducted regularly.  Pruning the bottom 20% of your revenue base can increase your margins and net income.  While this sounds easy, the problem is in actually measuring the total cost of service and that goes well beyond direct costs.

First start with the information that is readily available and trustworthy.  Revenue is usually always available for each customer.  Rank your customers using several factors such as the strategic importance to your organization, product segmentation, geographic markets and other factors of improtance.  Start to look at which customers end on top, and which are consistently at the lower end of the list.  This will begin to generate a lot of questions for discussion.  Next we will look at the challenges with associating costs.