Cost to Serve

Use AI to learn the true cost of serving your customers—identify less profitable customer segments and improve margin

Increase profitiability
Improve customer segmentation
Improve customer service

Cost to serve

Table of contents

What is cost to serve?

Cost to serve measures the cost of providing a product or service to a customer (quite literally, the cost of serving a customer). Tracking cost to serve can help businesses identify areas in which they can reduce costs and improve profitability.

Cost to serve can be a difficult metric to calculate, as it requires that you track a wide range of different—and often difficult to track—costs. These costs include both direct costs, such as the cost of goods sold and indirect costs, such as marketing and sales costs. It's the inclusion of both direct and indirect costs that makes cost to serve a more meaningful—albeit, more challenging to capture—metric than something such as cost of goods sold (COGS). Cost to serve can vary significantly from customer to customer, depending on the level of service provided.

Using AI to calculate cost to serve helps businesses overcome the challenges of calculating and maintaining an accurate view of cost to serve. That's because AI makes it possible to analyse vast amounts of data—including customer data, sales data, marketing data and customer support data—in a way that isn't possible manually.


AI-powered cost to serve solutions can provide a number of benefits to businesses, including:

  • Increased profitability: By helping to identify and reduce areas of high cost to serve, AI can help businesses to improve their profitability.
  • Improved customer segmentation: AI can help businesses to segment their customers based on cost to serve. This information can then be used to develop targeted marketing campaigns and pricing strategies.
  • Improved customer service: AI can help identify and address customer pain points. This information can then be used to improve the customer service experience.

Who it helps

AI cost to serve solutions can benefit a range of industries, including retail, manufacturing, healthcare and financial services. They can benefit businesses of all sizes, from SMBs to large enterprises. Generally, the more complex a businesses value chain, the more help an AI solution can be.

Specific roles that can benefit from AI cost to serve solutions include:

  • CFOs
  • CEOs
  • COOs
  • Sales managers
  • Marketing managers

How it works

At Datasparq, a typical AI cost to serve solution analyses the following types of data:

  • Customer data (such as sales data, marketing data, and customer support data)
  • Cost data (such as direct costs and indirect costs)
  • Operational data (such as order processing data and fulfilment data)

This data is then used to train a machine learning model to calculate cost to serve for individual customers and product categories. The model can then be used to generate cost to serve insights and recommendations.

Getting started

As outlined above, by identifying and addressing customer segments with a high cost to serve, AI for cost to serve helps businesses improve profitability, customer segmentation and customer experience.

Curious to learn more about how an AI solution could help your business? Contact us today for a free consultation.

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