What is Customer Concentration?
Share of revenue from the largest customers.
How to calculate it
Calculate Customer Concentration as: Revenue from top N customers / Total revenue × 100. Pull the inputs from your connected data and track the trend over time in your dashboard.
Examples
Example 1
Top 3 customers are $300k of $1M revenue -> 30% concentration, a notable dependency risk.
Example 2
The top 3 customers account for $300k of $1M revenue -> 30% concentration, a dependency risk that diligence would flag in a fundraise or sale.
Why it matters
Customer concentration measures the share of revenue coming from the largest customers and flags dependency and revenue risk. High concentration means the loss of a single account could materially hurt the business, which matters greatly to investors and acquirers. Ignoring contract timing of big accounts can understate near-term risk.
Benchmark context
Under 10-20% from any single customer is generally safer; higher concentration demands close attention to those accounts' health and renewal dates.
Common pitfalls
Ignoring contract timing of big accounts.
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