SITUATION
An electrical distributor struggled to track and understand how its gross margin and sales were evolving over time. The company had seen fluctuations in profitability but lacked a clear breakdown of how price, volume, and product mix were contributing to these changes. Leadership wanted a clearer understanding of the underlying factors influencing their financial performance.
OBSTACLES
The distributor faced multiple challenges:
- Data complexity: Their sales data was difficult to analyze due to high variability in pricing across customer segments.
- Customer churn: They were losing profitable customers but lacked visibility into whether churn was seasonal or market-driven.
- Lack of detailed sales decomposition: The team needed to break down the numbers in a way that distinguished price-driven gains from volume- or mix-driven changes.
Without a structured framework, the company was making decisions based on assumptions rather than hard data.
ACTION
The distributor leveraged the Revify platform to isolate the different drivers of sales and margin performance:
- Price, cost, and volume analysis: The tool allowed them to quantify how each component contributed to margin fluctuations.
- Customer mix breakdown: Revify helped them identify lost vs. new customers, enabling them to target high-value churning customers with retention strategies.
- Product churn impact: They discovered which specific product categories were underperforming, providing direction for future assortment planning.
This structured approach gave the team the clarity needed to make informed, data-driven decisions.
RESULTS
With the insights from Revify, the distributor took targeted action to reduce customer churn by 15%, particularly among high-profit customers. They also pinpointed profitable areas for new product introductions, leading to increased new product sales. By understanding the seasonal nature of churn, the company was able to adjust sales strategies proactively, rather than reacting after the fact.
