What is Incremental Profitability?

The incremental profitability of a customer is the contribution of that customer to your fixed costs- i.e. sales over time minus the variable costs of fulfilling that customer over time -typically including variable costs of goods sold, fulfillment costs, and any shipping costs.

This data on the costs of customer acquisition and the incremental profit overtime of the customers acquired is very valuable information for an entrepreneur. According to my VC friends, only about 10% of the companies they look at use this information. If you want to be in the top decile, start collecting it and using it to manage your venture.

I am also a big Eagles football fan and really enjoyed meeting at the Linc and working with Seth Joyner, Brian Dawkins, and Dave Spadaro. The most fun I have had with my clothes on was the 3 years I spent with 2 other Wharton Professors helping the Eagles apply statistical analysis to improve the team’s operations. I was in awe when we did a WolfPAC session in the locker room where I could see the lockers of my favorite players- especially Jason Kelce who went to the same high school I did, Cleveland Heights High. Kelce’s rant at the Art Museum after the Superbowl Victory was the best public speech I have ever heard.

I really enjoyed our interactions with the non- profits supported by the companies. Based on data, I observe that ventures that maximize short term profitability don’t do nearly as well as ventures that work to maximize their value to all of their stakeholders- shareholders, employees, customers, their communities, and the environment. Really successful ventures are loved by their stakeholders. I hope that future WolfPAC shows will reinforce this point. Doing Well and Doing Good are synergistic.

It was fun to work (and play a bit) with the other Wolves and the production team. Craig set the tone so no one took themselves too seriously. Even Kent loosened up as we worked together. I felt an immediate connection to the other Wolves. They all care about improving our world and put that ahead of their own personal advancement. They are also fun loving and enjoy a good joke. It was also fun to reconnect with my student Judy Cody who I hadn’t seen for many years.

We discovered really neat people and places in Philly I have never been which encapsulated the spirit that is unique to Philly. Even though I grew up in Cleveland, I consider myself a Philadelphian through and through. The WolfPAC experience cemented that identity.