A margin variance analysis measures the sources of difference in gross margins between pieces of business within a larger set of business. When the piece of business is defined as the the total sales to an individual customer over a period of time, sales and marketing managers can use this analysis to define customer specific engagement strategies to improve customer profitability. In this paper, we clarify how customer engagement strategies can be driven by a margin variance analysis, provide derivations of two equally-valid forms of a simple customer margin variance analysis, and demonstrate the margin variance analysis and the development of customer-specific engagement strategies with a case study example.
Smith, T. J., (2023). Margin variance analysis for informing customer engagement strategy. Association of Marketing Theory and Practice Proceedings 2023. 35. https://digitalcommons.georgiasouthern.edu/amtp-proceedings_2023/35