Uncovered a $30M profit opportunity hidden in the customer mix

A wheels and brakes OEM was earning almost all of its profit from a small share of its customers, and could not see it. Legacy ERP and siloed databases hid which accounts actually drove profit, while leadership weighed product-mix decisions and a shift toward power-by-the-hour contracts.

The challenge

Revenue was visible; profit by customer was not. More than $17M in profit was leaking to unprofitable customers, and the data needed to find it sat in separate Finance, Operations and Marketing systems that had never been joined.

The approach

The team unified Finance, Operations and Marketing data at the invoice level, including the balance-sheet impact of initial provisioning accruals, so each customer carried its true cost to serve. On that base it modeled cost to serve, marketing effectiveness and customer lifetime value, tying every segment to profit.

The results

The analysis showed that 16% of customers, 75 accounts, generated 62% of revenue and 91% of profit, while 8% of customers operated at a loss. It proved that a 1% improvement in discounting lifts customer pocket margin by 3%.

Pricing was targeted at the unprofitable accounts, and a customer-profitability tool made the analysis a standing management routine rather than a one-time study. In total, the work surfaced a $30M incremental profit opportunity.

What it means now

Pocket-margin analysis once required a dedicated team to stitch the data together by hand. With modern data platforms and AI-assisted reconciliation, the same view can refresh monthly, which turns pricing discipline from a project into an operating rhythm.