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To Sell Or Not To Sell? That Is The Question

What is your Ideal Customer Profile (ICP)?

Who are your best customers? How do you define “best?”

Is it driven by customer loyalty (NPS®)?

Customer share?

Highest revenue?

Highest margin?

The short answer to all of the above is: “Yes.”

Being fact-based and data-driven when it comes to developing your ICP will serve you well.

Whether a CEO, CFO, COO, or CSO, it is critical that you have a process for running a customer financial segmentation at least once a quarter. Not all customers are created equal. Never have been, never will be. To get the most out of this article, it is important to download the pictures or view in your web browser to understand the financial segmentation matrix.

The graphic above represents a customer financial segmentation matrix or Segmentation IQ™. We start by understanding the number of customers in each segment and the value each segment brings to the company in terms of revenue and gross margin. If Butler Street Research administered your Net Promoter Score® Survey, we would also provide two additional data points critical to developing your Ideal Customer Profile and launching a full-blown Account-Based Marketing initiative.

Those two are:

1. Loyalty via NPS®

2. Projected customer share through the eyes of the customer

We have segmented and color-coded the three revenue and three contribution margin segments as follows:

Revenue from left to right: <$20K, <=$50K, >$50K

Gross Margin from bottom to top: <35%, >35% <40%GM, >40% GM

The upper right segment (1-1) is high revenue, high margin. The lower left segment (3-3) is low revenue, low margin.

The objective is to determine resource allocation based on financial segmentation and the capability to move these accounts “up and over” to the right. With Butler Street’s proprietary Segmentation IQ™, we have the capability to run “what if?” scenarios to determine the best course of action.


  • What if we raise prices 10% in the lower left and 40% of the customers accept the increase?

  • What will that do to company revenue and EBITDA?

  • What if we stop servicing 20% of the customers in the lower left segment?

Once customers are segmented, we look to five key strategies to profitable growth:

Review: these are low revenue, low margin accounts. We need to determine if these clients are strategic to a particular market and if not, we need to raise prices/rates or move to a lower-cost channel (telesales, Internet).

Efficient: these are higher to high revenue clients with low margin. We need to determine if we can raise prices/rates and, if not, find a way to reduce the cost to service these clients.

Develop: these are clients with revenue from low to high with margins accretive to the overall company/division margin. We need to find a way to gain a bigger share of wallet in these clients through “deep and wide” penetration.

Grow: these are clients with low revenue and high margin. We must understand our penetration rates and make every effort to advance the relationship by selling more products and services to these clients.

Protect: these are higher to high revenue and high margin clients and must be protected at all costs. We need to start by completing Quarterly Business Reviews to educate these clients on the value we bring and further expand and secure our relationship.

Understanding the revenue, share, loyalty, and margin contribution by customer, by segment can provide actionable insights for their sales team. It’s the starting point for making better decisions and developing long-term strategies for success, such as Account Based Marketing. If you don’t know which customers are loyal and which products/service lines are providing gross margin, you’re not maximizing profitability. Underperforming segments represent opportunities for improvement. High-performing segments provide expansion opportunities. The resources and efforts should be shifted to segments and customers with greater potential for positively impacting the bottom line.

At Butler Street, we have developed tools like Segmentation IQ™ to ensure our clients are making the right decisions as it relates to optimizing the client experience. Once financial segmentation is completed, actionable insights are developed to ensure we are advancing the relationship through Key Account Management and cross-selling additional products and services. Want to learn more? Contact us and let’s talk.


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