Serve (Company) Costs

In the analysis of a company's approach to managing functional costs, this term refers to after-sale support of the customer or the product. In a manufactured product, Serve costs include all costs of warranties, part supplies, trained repair employees, service centers, customer hotlines, and so forth. In a wholesale or retail company, Serve costs include after-sale services such as handling returns and crediting the Final Customer for the returned product. These costs may also include the costs of installing the product for the Final Customer and training the customer in the product's use.
(See also Functional Costs)

Example 1:

In 1981,General Electric created the GE Answer Center to service end users who had questions or problems with any General Electric product.
(Year 1992-SIC 3630)

Explanation: The GE Answer Center was a Serve Cost for General Electric in its relationship with Final customers.

Example 2:

Pizza Hut improved sales by concentrating on service and quality of product. The Company started a customer satisfaction measurement system and a new training program to upgrade skills of all restaurant employees.
(Year 1995-SIC 5812 )

Explanation: The customer satisfaction measurement system and the new training program for all restaurant employees are part of the company's Serve Costs to help customers resolve problems with the product.

Example 3:

MBNA America is offering its platinum card with customer service representatives available 24 hours a day, 365 days a year. They will respond to credit line increase requests in 15 minutes or less, and will work diligently to resolve disputes with merchants.
(Year 1996-SIC 6141)

Explanation: MBNA has increased its spending on its Serve Costs to help its customers obtain prompt assistance with problems.

Example 4:

At the Omni Park Central Hotel, when a customer line exceeds six people, assistant managers are dispatched to the hotel restaurant to bring out orange and grapefruit juice to serve the people in line.
(Year 1990-SIC 7011)

Explanation: The hotel's spending on people to serve juice to guests waiting in line is a Serve Cost to help their guests feel better about the problem of a long line.