Blog · Board and management reporting
The honest answer to what a good top-ten customer share is: it depends on the industry's normal, on the trend at each of the top accounts, and on whether the share is concentrated in one buyer or spread across ten. This page gives the ranges commonly quoted, when each is meaningless, the three measures that turn the question into a table, and the figure to compute before anyone quotes a percentage.
The question usually arrives before a board meeting, a financing or a sale: is our concentration too high? The answer is a table, not a number, and this page explains what is in it.
| Source | Rule | What it is for |
|---|---|---|
| Lenders | No customer above 10 to 15 percent of revenue | Covenant underwriting |
| Acquirers | Top ten under 50 percent; top one under 20 | Valuation discount triggers |
| Auditors | Disclose customers above 10 percent | Reporting rule |
| Rating agencies | Top five under 30 percent for investment grade in some sectors | Credit rating |
None of these is an operating target. They are the points at which someone else applies a discount or a disclosure. A company can be healthy above all of them and fragile below all of them.
The share that is normal depends on how many customers a desk can have.
| Desk | Top ten share, typical | Why |
|---|---|---|
| Builders' merchant, distributor | 15 to 30 percent | Thousands of accounts, small each |
| Professional firm | 25 to 45 percent | A partner's book is a few dozen clients |
| Mid-market SaaS | 20 to 40 percent | Many similar contracts |
| Enterprise SaaS | 40 to 60 percent | Few large contracts |
| Contract manufacturing, components | 50 to 80 percent | Customers are OEMs; there are not many |
| Sports and media partnerships | 60 to 85 percent | A dozen partners fund the programme |
| Oilfield services | 50 to 70 percent | A few operators per basin |
A component manufacturer at 70 percent is at its industry's normal. A distributor at 70 percent is a very different company. The concentration by industry hub works each desk.
Top-ten share = revenue of top ten ÷ total revenue, both from the same ledger over the same period
Compute it by revenue and by margin. A top ten at 40 percent of revenue and 20 percent of margin is a different book from one at 40 and 55. Then compute the same share twelve months ago from the same ledger. The direction outranks the level: 35 percent rising from 25 is a story; 55 percent steady for five years is a structure.
A high share is only a risk to the extent the accounts in it are at risk. Each top account against its own history:
| Account | Share | Trailing 12 months vs prior | Contacts | Renewal | Rows |
|---|---|---|---|---|---|
| A | 14% | −12% | 1 | 4 months | The risk |
| B | 9% | +8% | 4 | 18 months | Not the risk |
A book at 60 percent where every top account is growing with four contacts each is safer than a book at 30 percent where the largest is declining with one contact. The share says how much depends on them; the rows say whether it is depending on something solid.
Top ten at 50 percent can be one account at 41 and nine at 1, or ten at 5 each. The largest single share and the second-largest are on the same table as the top ten. The single-account figure is the one lenders and acquirers actually price.
| Measure | Formula | From |
|---|---|---|
| Top-ten share, revenue | Top ten ÷ total | Invoice ledger |
| Top-ten share, margin | Top ten margin ÷ total margin | Ledger with cost |
| Same, prior year | Same, prior period | Same ledger |
| Largest single share | Largest ÷ total | Ledger |
| Trend per top account | TTM ÷ prior TTM, per account | Ledger |
| Contacts per top account | Distinct contacts with activity in 90 days | CRM |
Six columns. The worked example on ten customers computes each by hand, and the norm and benchmark piece covers when an outside figure is allowed at all.
A percentage quoted alone. Forty percent, and everyone in the room fills in their own meaning.
The lender's rule used as the target. A component maker chasing a top ten under 50 by adding small accounts it cannot serve.
Revenue only. The top ten at 40 percent of revenue and 65 percent of margin, and the margin figure never computed.
Level without trend. Steady for five years, treated as this quarter's emergency; up ten points in a year, treated as fine because it is under fifty.
A good customer concentration is one at or below the desk's normal, stable or falling against its own history, held in accounts that are growing with several contacts each, and with no single account large enough to trigger someone else's rule. Compute the six columns. Covirage produces the table from the ledger and the CRM every month, with the identity that the top ten plus the rest equals the ledger total.
It is the threshold a buyer's due diligence will flag, and a bank's covenant may name it. Operationally it is too much only if that customer is deteriorating, has one contact, or has a renewal date nobody owns. The 10 percent alone says nothing; the row for that customer says everything.
Wide. Distribution and merchant trade often sit at 15 to 30 percent; professional firms at 25 to 45; SaaS at 20 to 40 in mid-market and higher upmarket; component and contract manufacturing at 50 to 80; sports and media partnerships above 60. The industry hub on this site has the normal per desk, and the number to trust is your own base's history.
The top-ten share by revenue and by margin, the same share twelve months ago, the trend at each top account against its own baseline, and the largest single share. Four numbers, one table, and the question answers itself for your book rather than for an average.