Knowing Which Clients Are Worth Winning

The situation

The company was built around technology from the start and serves two very different client bases: corporate accounts and independent practices. A president and a full C-suite run day to day operations, supported by a service center outside the U.S. The finance function was in good order. A capable controller had AP and AR under control, and when a significant receivables problem appeared, the team resolved it themselves.

The problem

Good books, however, were not the same as good visibility. Every new piece of technology, every new office, every new division moved labor cost, turnaround time and quality control at once, and management had no way to test a decision of that size before making it. Board reporting was also short of what a lender or an acquirer would expect, and either is a realistic event at this level. What was missing was a model that could be tested.

The approach

To close that gap, Gentyx built a business model for the company, articulating each assumption on labor, technology and overhead and testing whether it held. The model set the budget, and the budget was tied to the monthly financials, so variance was visible as it happened. Because corporate and independent clients differ in buying patterns, longevity and profitability, averaging them hid the answer, so Gentyx built the two segments in as parallel tracks and ran three months of cycles with the board.

The results

With the two tracks running, scenario analysis showed staff cost was similar across both segments while contribution margins were not. The board could finally see which clients consumed labor out of proportion to the revenue they brought in. That produced a sales map: the segments most efficient to serve, the profiles with the highest revenue per client, and the ones to approach selectively. Product management gained a target too, since automation earns the most in the least profitable segments.