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    #Business Function:Sales

Finan
ce Topic:Customer Concentration Risk
How to Mitigate the Risk of

ng
rketi Customer Concentration
Ma
BITE SIZE Customer concentration is one of the many

risks affecting small businesses, startups & corporations.

The risk must be understood, but actions must be taken.

t
Developing a Strategic Plan is one of the most effective

en
Customer concentration risk generally arises when

em
ways to reduce the risk of customer concentration

gy a large customer or a single industry vertical represents

ag
olo and to drive growth and profitability.

an
chn more than 10% of a company's revenues.

MBA   Stories

M
Te

le
op
Diversification is a key Strategy to hedge against the risk.

Pe
Customer Concentration Risks-What should i look for?
- Generating Sales from many number of customers 

- Entering New Markets different from core business

If your biggest five customers account

- Developing Multiple Products

for more than 25 % of your revenue,

in a fun way

ess Learn ing your customer concentration is high.

Providing Excellent Customer Service
Busin Revenue In addition, if a single client accounts

for more than 10 % of your revenue,

Sal you will likely to face elevated

Developing Competitive Advantage using innovative

es Marketing Strategies

er
customer concentration issues.

tom
Venture Capital Source:
That means a single failure point

cus
can significantly impact on sales,
Focusing on profitability rather than revenue

ge
Strategy supply chains, and the bottom-line.

lar
by managing credit & payment policies

hip As the saying goes, don't put all eggs

aders eneu
rs in one basket.
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