Delivering for Best-in-Class Wholesaler-Distributors

"Customer stratification has greatly enhanced our understanding of our customers. We now know which customers maximize our value proposition. Linking customer stratification to our supplier and inventory systems empowers our team to quickly distill the variables affecting risk and reward so they can make better and more profitable business decisions."

—Frank Flynn, President, Sager Electronics

F. Barry Lawrence, Pradip Krishnadevarajan, Senthil Gunasekaran

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Customer stratification is a critical business process.

Best-in-class distributors categorize customers based on various factors, but customer stratification has long been an unexplored area for most distribution companies. Not anymore. At last, that gap is filled by this first-of-its-kind research study, Customer Stratification: Best Practices for Boosting Profitability.

Specifically for wholesaler-distributors, this pioneering study offers you 20 practical action steps that your company can implement today and over time as a result of the best practice research conducted with 68 real wholesaler-distributors across multiple lines of trade.

This cutting-edge study focuses on the four key dimensions:

  • Buying Power
  • Customer Loyalty
  • Profitability
  • Cost-to-Serve.

Rather than focus on sales force communication, this research focuses on customer relationships and the value customers provide to their wholesaler-distributors. That value is achieved through:

  • increased revenue—the value to the customer must be addressed
  • decreased expenses—complex service offerings and how the customer accesses them are key factors
  • optimal allocation of assets—driven by customer and supplier expectations.

Most customer stratification applications focus on a single dimension, such as sales volume or gross margin. But this doesn’t guarantee a profitable or practical result. This study presents the customer stratification framework, a distributor-specific cost-to-serve model, a step-by-step implementation approach, and a series of real-world case studies. The customer stratification framework not only distinguishes customers from each other, but also provides a blueprint for conducting future business. The book concludes with a plan-of-action roadmap, which provides an action plan and suggestions for implementing a customer stratification framework at your company.

This book is a collaboration of the NAW Institute and Texas A&M, two leaders in wholesale distribution education and training.


What Distributors Are Saying

“The customer stratification model has allowed our company to continue to stay ahead of our competition and excel in profitability and customer service.”

—Tim Miller, CEO, Security Contractor Services, Inc.

“Customer Stratification” has the power to enable us to transform our company from being product-driven to customer-driven. It has helped us understand our customers in greater detail, enabling us to optimize our selling resources, which will result in an improved ROI.”

—Don Schalk, Former President and COO, C.H. Briggs Company

About the Authors

F. Barry Lawrence

Barry is Director of the Industrial Distribution Program and Founder of the Global Supply Chain Laboratory at Texas A&M University. He is a Fellow of the NAW Institute for Distribution Excellence, and an author of eight books on distributor competitiveness. Barry serves as an advisor to the distribution industry on profitability and supply chain management. He is a frequent speaker for distribution associations, buying groups, and companies on a wide range of supply chain topics.

Pradip Krishnadevarajan

Pradip is the Co-founder of the Global Supply Chain Lab at Texas A&M University. With more than 14 years of experience as an industry advisor, educator, and speaker for wholesale distribution, Pradip helps wholesaler-distributors create strategic and tactical competitive advantage. He is an author of six books on best practices, customer analytics, business transformation, and profitability.

Senthil Gunasekaran

Senthil leads research on the wholesale distribution industry at Texas A&M University. With 15 years of experience in distribution and manufacturing, he advises distribution firms, delivers executive education, and speaks at industry forums on topics influencing distributor competitiveness. He is an author of five books on distributor profitability, growth, and analytics, and holds a doctorate degree from Texas A&M.