The executive team saw ample room for Quiet Logistics to grow in the apparel e-commerce market. US. retail e-commerce sales of apparel and accessories reached $38 billion in 2012 and was expected to reach $86 billion in 2018."3 Online sales of designer clothes alone was worth $4.4 billion in 2012.4 However, facing prospects to both expand with existing clients and take on new ones, the executive team felt they needed to be careful in choosing which opportunities to pursue. the company had chosen to focus on clients with high growth potential. "We decided to focus on companies that are just starting to scale- smaller and mid-sized companies selling relatively high-end products," We aren't interested in working with larger companies that make a lot of special service demands and then expect extreme volume discounts. And product fit is also a concern. Any products we take on need to align with our storage capacity and handing capabilities-fast moving and, ideally, compatible with the high-end apparel vertical where we offer something unique. We also need to look at the basic business health of the client. Do we think they have runway and that we can grow with them? Some companies are too small for us, while others want more services than we currently provide, such as call center, photography, merchandising, and demand planning." The company had a strong client retention track record. Although Quiet Logistics had declined to renew contracts with some clients who were not profitable, the company had never lost a client due to performance problems. Lemerise credited Quiet Logistics's superior service execution, unique value-added offerings, and the inherent switching costs in changing order-fulfillment providers. Like other e-commerce fulfillment providers, Quiet Logistics generated the bulk of its revenue and profit from a small number of large clients. The loss of one or two of these major clients could severely hurt the business. At the same time, these large, fast-growing clients often escalated their demands (e.g., discounted pricing, special services) in negotiations with Quiet Logistics and required a growing share of the company's finite warehouse capacity, constraining its ability to bring in new clients, ~ Quiet Logistics had doubled in size every year since its inception and became profitable in the second quarter of 2012. Now, management believed that the company should focus more on improving process efficiency. As Welty stated emphatically, "This year is all about performance and improving margins."To track profitability, Quiet Logistics used internally developed software, called The Daily Flash, to generate operational reports on costs and productivity. The Daily Flash also produced company-wide and client-specific reports on unit cost and profitability. The data informed discussions in weekly management meetings attended by Welty, Johnson, Dekin, French, Lemerise, and the heads of client services and IT. "The data highlights internally where the challenges are," said French. "For instance, when [one specific unit cost measure that we track] is at $1.40, it is very scary and we know that we're not making money. When it's at $0.80, we know that we're in good shape." ~ The Daily Flash highlighted how labor costs and costs per unit increased when volume throughput declined, as well as in periods when Quiet Logistics ramped up staffing and training in anticipation of a major client sale. In addition, the client-specific metrics illuminated relative costs by retailer. "With this information in hand, we can work to lower those costs ourselves and also to negotiate pricing with our clients, asking them to help us cover the increase in costs that are driven solely by their special sale events," explained French.~Customer profitability analysis This involves calculating profit carned from a specific customer. The profit calculation is based on costs and sales that can be traced to a particular customer. This technique is sometimes referred to as "customer account profitability". ~ Lifetime customer profitability analysis ~ This involves extending the time horizon for customer profitability analysis to include future years. The practice focuses on all anticipated future revenue streams and costs involved in ser- vicing a particular customer.~ Valuation of customers as assets The technique refers to the calculation of the value of customers to the company. For example, this could be undertaken by computing the present value of all future profit streams attributable to a Particular customer