Every company has unprofitable customers, and at first blush it's tempting to simply stop doing business with them. Before you do that, however, you should look at your own processes for serving them, according to Robert Kaplan in Taking Strategy to the Front Lines.

"The first message is heal thyself and make sure your processes in serving that customer are reasonably efficient," Kaplan says. Cutting the cost-to-serve could have a big impact on how profitable those customers are.

If you're persuaded that you are efficient, the reason the customer is unprofitable may be because of the special services the customer is asking for. Consider charging for those services, as industrial distributor Valin has done. (See: Services Drive Growth for Valin)

"There are a whole series of things you can do to transform unprofitable customers to profitable ones," Kaplan says.