When high sales don’t mean high profits: rethinking client value

A few years ago, in a strategy session with the financial team of a multinational company in the industrial sector, I heard this phrase that I will never forget: "Our best customers are the ones who buy the most". It seemed like an indisputable truth. They had beautiful graphs showing the top 10 in revenue, loyalty campaigns for that group and even exclusive sellers to serve them. Everything seemed to be in place... until we started calculating the true cost of serving.

It took just three weeks of serious analysis to discover what so many still avoid seeing: not all customers who buy the most are the ones who generate the most value. Some were true "margin eaters": demanding, unpredictable, with constant personalized requests, endless after-sales requirements, and unfavorable payment terms. Add to that bespoke logistics, extended technical support, frequent order changes, and sales teams that spent days chasing a single contact. The result: of those 10 "best" customers, only 4 had positive margins. The rest, in fact, cost the company more than they delivered.

See beyond income

At ICX we have specialized in demolishing those beliefs that distort real profitability. One of the biggest mistakes we see is the tendency to measure "customer value" by their purchase volume, without considering the cost of serving them. That bias, while comfortable, can cost a company millions.

In practice, a customer who bills $500,000 a year but demands urgent deliveries, weekly visits, round-the-clock technical support and pays in 90 days, can leave you less margin than another who buys $100,000 in a standard way, with automated orders, without any complaint and with punctual payments. In our experience, that second customer, although less visible, is five times more profitable.

Customer ROI is where the focus must be placed

When we talk about ROI (Return on Investment) in the context of customers, we refer to the relationship between what a customer generates and what it costs to serve them. It is a calculation that should be present at every sales meeting, in every loyalty strategy and in every portfolio review.

The basic formula we use is:

Customer ROI = (Net Revenue – Associated Costs) / Associated Costs

But we don't stop there. A strategic evaluation requires looking at more variables:

• How consistent is your purchase volume?
• Do you require discounts or special conditions?
• How much time does it consume from the sales team?
• How punctual is your payment?
• Does it generate referrals or open new opportunities?
  
  

Only then do we truly understand their contribution to the business.

Practical example: four customers, four realities

I share with you a real case of a client of ours in the B2B distribution sector:

Now, I ask you: who do you prefer to continue serving and build loyalty? The one that bills more, or the one that leaves you more margin with less effort. That decision, which seems obvious on paper, is not so on the executive boards where the rankings are still by turnover. That's where serious customer profitability analysis comes in: to make decisions with data, not insights.

CLTV: The importance of looking at value over time

A complete view of ROI requires adding an additional variable: Customer Lifetime Value (CLTV), i.e. the total value that a customer leaves throughout their relationship with you. Because a profitable customer for one quarter is not the same as one profitable for five years.

The most common formula is: 

A customer with a low monthly margin, but very loyal and stable, can outvalue one who leaves a high margin but is sporadic or fleeting. That is why at ICX we work with both axes: current profitability and projected value.

And what to do with those who do not measure up?

Once you have the data clear, the next step is to act. It's not always about cutting ties. Sometimes it is enough to renegotiate conditions, migrate to a more efficient channel, adjust the frequency of visits or change the way of billing. But there are cases where the right decision is to let the customer go.

Yes, let it go.

I remember a client in the financial services industry who was reluctant to lose one of their "historic clients", with whom they had been working for more than 10 years. When we saw the numbers, the result was brutal: they cost him $1.20 for every dollar he came in. After reviewing alternatives, it was decided to reduce the level of service, which led the client to migrate to another firm. The result? In less than six months, the overall profitability of the portfolio rose by 8% and the sales team recovered more than 70-man hours per month.

What no one tells you: the impact on sales and motivation

There's a quiet but very powerful benefit when you manage your portfolio based on profitability: the sales team regains focus. Stop chasing toxic accounts and start taking care of the customers who truly contribute. And that changes everything.

Motivated salespeople, simpler processes, less rework, fewer emergencies and more strategy. I've seen it several times: a company that aligns its efforts towards the right customers not only improves its financial indicators and also improves its internal environment.

How to get started?

If you're reading this, you've already taken the first step. The next step is to audit your customer base, calculate their ROI, identify patterns, and create an action map. At ICX, we use visual dashboards, profitability segmentations, and scenario simulations to help you make better decisions.

You can start with a sample of your top 20 customers and apply this formula to them. I assure you that the results will change many of your assumptions.

As you saw in this article, a good cost model is not just an accounting exercise. It is a compass for prioritizing, a tool for planning and, above all, a lever for meaningful growth.

So, the next time someone tells you that the best customer is the one who buys the most, ask them: With what margin... and how long does it take?

Do you want to see the analysis applied to your client portfolio?

Schedule a session with us. At ICX, we can help you transform your decisions with real data.

Because having more customers is not growing. Having profitable customers does.