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Here is an example of how visual analytics using Sales & Pricing metrics can be powerful in driving real, measurable change for your Company.
Below is a manufacturing company’s Customer landscape (fictitious), organized by their Trailing Twelve Months’ performance.
For ease of decision-making, we grouped our customers into six performance clusters based on TTM Gross Margin % and Cumulative % of Net Sales.
To the right of the vertical line are 12% of the customers that drive 80% of Net Sales; to the left are 88% of customers that generate 20% of Sales.
It is a typical distribution and Sales vs. Margin imbalance in many B2B settings, with companies struggling to establish the ideal relationship between Customer Size and their Margin profiles.
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Ideally, our smallest Customers should have the best Margin % performance, receiving the smallest Discounts, Rebates, and other Sales Credits.
A quick visual like the one below using your Transactional data (quickly done with Power BI or Tableau) can guide your Pricing, Commercial and Finance teams in the right direction to raise the Company’s margin performance:
✔ Best of the Best: these are your largest Customers that also deliver above-average Margin %. We need to nurture these customers and protect them from defecting to the competition. Price increases must be well thought out and carefully communicated with this group. Whenever possible, allow these customers to forward buy during price increases and even frame the savings you’ve delivered for them!
✔ Light Sellers – Top Margins: these are small customers delivering strong Margins. We need to identify the ones that have the potential to grow and upsell/cross-sell as much as possible to increase our Margin base.
➤ Top Sellers – Light Margins are some of our largest customers, with the opportunity for higher Margins. Devise sales strategies to Trade Up to higher-priced products.
✘ Light Sellers – Light Margins are small customers with below-average Margins %. We need to think about increasing prices for this group next quarter. Remember, a “price increase” doesn’t have to be a List Price increase: we can rationalize discounts, Promotions, and Other Credits.
➤ Top Sellers – Bad Margins: these are the largest customers with Margin % profiles in the Bottom 25th percentile. Every % Margin reduction for this group hurts our Company’s Operating Profit in a meaningful way. We need to manage these relationships carefully and increase prices over time. Depending on their “cost to serve,” we may think about letting some customers churn out over time.
✘ Dead Zone: 20% of our Customers driving 4% of our Total Gross Margin $. This group is priority #1 for us to fix. List price increases, fewer Discounts, reduce Rebates or change to “pay for performance,” etc. We will lose some of these customers to the competition. Still, it will likely help our Operating Profit and won’t meaningfully impact our Gross Sales.
Frequently asked questions about transactional data
How can transactional data guide pricing actions?
A quick visual of sales and pricing metrics, built from transactional data in Power BI or Tableau, shows where to act. In the example, a manufacturer plots its customers by trailing twelve months’ gross margin percentage and cumulative share of net sales, then groups them into six performance clusters that point pricing, commercial, and finance teams toward higher margins.
What does a typical B2B sales and margin imbalance look like?
In the example, 12% of customers drive 80% of net sales, while the other 88% generate 20%. That distribution is typical in B2B, and many companies struggle to set the right relationship between customer size and margin. Ideally, the smallest customers should deliver the best margin percentage and receive the smallest discounts, rebates, and other sales credits.
What are the six customer performance clusters?
Best of the Best are large customers with above-average margins. Light Sellers with Top Margins are small, profitable accounts. Top Sellers with Light Margins are large accounts with room for higher margins, and Light Sellers with Light Margins are small accounts with below-average margins. Top Sellers with Bad Margins are large accounts in the bottom quartile, and the Dead Zone holds the customers that add the least gross margin.
How should you treat your largest high-margin customers?
Nurture Best of the Best customers and protect them from defecting to competitors. Plan and communicate price increases to this group carefully, let them forward buy ahead of increases where possible, and frame the savings you have delivered for them. Among Light Sellers with Top Margins, find the accounts with growth potential and cross-sell or upsell to widen the margin base.
How do you raise margins on low-margin customers?
For Light Sellers with Light Margins, plan price increases for next quarter, which can mean rationalizing discounts, promotions, and other credits instead of raising list prices. Manage Top Sellers with Bad Margins carefully, raise their prices over time, and consider letting some churn depending on cost to serve. For Top Sellers with Light Margins, use sales strategies that trade customers up to higher-priced products.
What is the Dead Zone in customer margin analysis?
The Dead Zone is the group of customers that adds the least gross margin, in the example 20% of customers driving just 4% of total gross margin dollars. It is priority number one: raise list prices, cut discounts, and reduce rebates or move them to pay-for-performance. Some of these customers will leave for competitors, but operating profit will likely improve without a meaningful hit to gross sales.
Related Reading
- Dynamic Pricing for B2B: Real‑Time Strategies to Optimize Wholesale and Distribution Margins
- Retailer Pricing: Frameworks, KPIs & Examples
For broader industry perspective on pricing analytics and revenue growth management, see McKinsey’s Growth, Marketing & Sales insights.
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