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    Customer concentration risk arises when a large customer or single industry represents more than 10% of a company's revenues. If a company's top five customers account for over 25% of revenue or a single customer represents over 10% of revenue, the company faces elevated customer concentration risk. This means the failure of a single large customer could significantly impact sales, supply chains, and profits. To mitigate this risk, companies should develop a strategic plan to diversify revenue sources through new customers, markets, and products. Maintaining excellent customer service and competitive advantages can also help reduce over-reliance on any single customer.

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    Customer concentration risk arises when a large customer or single industry represents more than 10% of a company's revenues. If a company's top five customers account for over 25% of revenue or a single customer represents over 10% of revenue, the company faces elevated customer concentration risk. This means the failure of a single large customer could significantly impact sales, supply chains, and profits. To mitigate this risk, companies should develop a strategic plan to diversify revenue sources through new customers, markets, and products. Maintaining excellent customer service and competitive advantages can also help reduce over-reliance on any single customer.

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    © All Rights Reserved
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    8 views3 pages

    Bite Size MBA Stories

    Uploaded by

    sushant pai
    Customer concentration risk arises when a large customer or single industry represents more than 10% of a company's revenues. If a company's top five customers account for over 25% of revenue or a single customer represents over 10% of revenue, the company faces elevated customer concentration risk. This means the failure of a single large customer could significantly impact sales, supply chains, and profits. To mitigate this risk, companies should develop a strategic plan to diversify revenue sources through new customers, markets, and products. Maintaining excellent customer service and competitive advantages can also help reduce over-reliance on any single customer.

    Copyright:

    © All Rights Reserved
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        #Business Function:Sales

    Finan
    ce Topic:Customer Concentration Risk

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    BITE SIZE Customer concentration is one of the many

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    Customer concentration risk generally arises when

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    MBA   Stories

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    Customer Concentration Risks-What should i look for?

    If your biggest five customers account

    for more than 25 % of your revenue,

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    your customer concentration is high.

    Business Learn
    Revenue In addition, if a single client accounts

    for more than 10 % of your revenue,

    Sal you will likely to face elevated

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    customer concentration issues.

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    That means a single failure point

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    Strategy supply chains, and the bottom-line.

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    Ent www.linkedin.com/in/sushantvpai
    How to Mitigate the Risk of

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

    Developing a Strategic Plan is one of the most effective

    ways to reduce the risk of customer concentration

    and to drive growth and profitability.

    Diversification is a key Strategy to hedge against the risk.

    - Generating Sales from many number of customers 

    - Entering New Markets different from core business

    - Developing Multiple Products

    Providing Excellent Customer Service

    Developing Competitive Advantage using innovative

    Marketing Strategies

    Focusing on profitability rather than revenue

    by managing credit & payment policies

    As the saying goes, don't put all eggs

    in one basket.

    www.linkedin.com/in/sushantvpai
    Thank you for Reading

    For More Business

    Learnings

    through Stories
    Follow me on 

    www.linkedin.com/in/sushantvpai

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