SR
ENExample situation: One Customer Represents 42% of Revenue
Let us look at numbers that surprise many companies.
Question
“Our largest customer now represents 42% of total revenue. The relationship is profitable and the customer wants a three-year contract, but is asking for an additional discount. Should we accept?”
What to question
What happens to the business if this customer leaves in three years? Does the extra discount cut into profitability enough to undermine the value of the contract? Is there something to ask for in return, instead of simply granting the discount?
How the depth changes
Focused → broader → deepest
Four perspectives quickly separate the contract from the concentration risk: profitability after the extra discount, how much of the relationship…
Five additional perspectives challenge the assumption that saying yes is safe, model what happens if this customer's own business slows down, weigh…
Six further perspectives stress-test the capital and cash-flow effect of a bad renewal three years from now, alternative negotiating structures that…
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