Cost to serve

Definition

The full cost of serving one customer, set against what that customer actually earns.

Why It Matters

It counts everything a customer consumes, the sales attention and the order handling and the delivery and the returns, and not the pick-and-pack cost of one line. Most sellers have never made the calculation, and when it is made a predictable thing happens: a minority of accounts earn the money and a long tail breaks even or loses. That is the improvement a buyer is paying for, and it has to be priced as work and not assumed as upside. Ask whether anybody here has ever costed a customer.