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In other words, customer profitability depends not only on the revenue resulting from sold units of a product or service, but also on the 'back end' services provided, including marketing, distribution, and customer service. [1] Once costs are matched with customer revenues, segments of differing profitability can be discovered.
The term "Service Level Agreement" (SLA) is frequently used for all aspects of a service level, but in more precise use one may distinguish: [4] Service Level Indicator (SLI): measures of service level, like availability (uptime); Service Level Objective (SLO): objectives based on these indicators, like 99.95% availability;
Sustainability marketing should consider the total customer cost for the entire consumption process, which is equal to the sum of all costs related to a product. This includes the price, purchase costs, use costs and post-use costs. Marketers integrate this perspective into a marketing strategy in order to promote sustainable products.
A service-level agreement can track multiple performance metrics. In this context, these metrics are called service level indicators (SLIs). The target value of a given SLI is called a service-level objective (SLO). In IT-service management, a common case is a call center or service desk. SLAs in such cases usually refer to the following SLIs:
Customer support is a range of consumer services to assist customers in making cost-effective and correct use of a product. [9] It includes assistance in planning, installation, training, troubleshooting, maintenance, upgrading, and disposal of a product. [9]
Cost to Serve (CTS or C2S) is an accountancy and financial planning tool used to calculate the profitability of serving the needs of a particular customer account, based on the actual business activities and overhead costs incurred in servicing that customer or customer type. [1]
Retention costs include customer support, billing, promotional incentives, etc. Period, the unit of time into which a customer relationship is divided for analysis. A year is the most commonly used period. Customer lifetime value is a multi-period calculation, usually stretching 3–7 years into the future.
The main drivers for a company to establish or optimize its service management practices are varied: High service costs can be reduced, i.e. by integrating the service and products supply chain. Inventory levels of service parts can be reduced and therefore reduce total inventory costs. Customer service or parts/service quality can be optimized.