12. How well does your organization measure cost-to-serve?

You answered: It measures cost-to-serve well enough.

Ventana Research's view: Good. Understanding the cost-to-serve individual customers provides companies with a better understanding of which customers positively contribute to the bottom line and those who don't. Understanding the individual components of the cost-to-serve makes it possible to tailor offerings with greater precision. This can enable greater flexibility for salespeople in adding or withhold charges depending on the type of negotiation and the attractiveness of the deal or buyer. Ideally, understanding the cost-to-serve enables companies to make informed choices to manage customer profitability. Even though you think your organization is measuring cost-to-serve well enough, this is a key component driving customer profitability so it's important to be sure that it is accurate. Be certain, for example, that all the costs to serve are reflected in that measurement. It's also important to reflect all of the costs related to a specific deal to ensure that decisions about pricing and offers are made based on the most relevant data. Your organization should have a rigorous process in place for calculating the cost-to-serve. This is likely to involve your financial planning and analysis and sales operations groups.

Self-Assessment: Pricing