Most businesses spend significant amounts of time focusing on and calculating product or service costs. This is understandable and imperative in determining pricing and margins.
Did you know, however, you can apply similar techniques such as Activity Based Costing (ABC) to quantify the costs and resources used to support individual or groups of customers?
Not every customer requires the same level of service and, as a starting point, we’ve listed some questions worth considering:
1. What are the costs and resources required to sell to the customer?
2. What are the order entry costs? For example, are orders received and entered manually, or electronically via API?
3. Are there additional costs or discounts such as rebates, penalties or additional sales discounts?
4. What are the warehouse and shipping costs? Are there a few large orders or lots of small orders?
5. Does the customer pay on time and how does this impact cash flow and finance costs?
6. What are the costs of customer support and how much time is consumed in after-sales and administrative support?
Contact us at CAS if you want to know more 🙂