Bain & Company

Bain & Company revolutionized consulting by applying the marginal value theorem to client relationships. Founded in 1973 when Bill Bain left BCG, the firm's innovation was client selection based on marginal value rather than project volume. While BCG worked with any paying client on single projects, Bain offered industry exclusivity and stayed with clients through multiple projects.

Bain calculated that relationship capital changes economics: a $400K project with an existing client at 60% margin yielded the same $240K profit as a $600K new client project at 40% margin (due to sales costs and delivery risk). By optimizing patch residence time - leaving only when marginal returns fell below new-client acquisition profit - Bain achieved 80%+ client retention, 20% premium pricing, and 35-40% profit margins.