
Customer service is not cost of sales. It's a marketing expense. - paraschopra
http://www.paraschopra.com/blog/personal/customer-service-is-not-cost-of-sales-its-a-marketing-expense.htm
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vetinari
To paraphrase, "this is so bad, it is not even wrong".

Firstly, both cost of sales (COGS) and sales, general and administrative
(SG&A, where marketing belongs) are profit and loss statement (P&L) items.
They really have nothing in common with balance sheet.

Secondly, it is in COGS, because support is directly attributable to specific
product and directly impacts given product's gross margin. You can
specifically tell, which product is well or badly designed, due to support it
requires.

In specific cases (one-off products - projects), support is financed from
reserves created for specific projects. These reserves impact the margin of
the project (and the project manager's bonus is usually based on the project
margin).

Thirdly, it is not "management" who decides, what goes where. It is CFO and
his minions, who base it on "accounting standars" (US GAAP or IAS, depending
where you are), so the revenues and cost structure is comparable among
companies. Benchmarking is not used only in tech field.

Fourthly, where comes this belief, that management does not slash SG&A costs,
but does COGS? They do both, but COGS, if it leads to acceptable gross margin
is left alone; SG&A is being cut at any possible chance.

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wccrawford
I hate to burst his bubble, but management feels the same about paying for
marketing as they do for paying for sales. It's practically the same thing,
when it comes down to it.

I'm all about good customer service, but relabeling it on the expense sheets
is not going to change anything.

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paraschopra
It changes how you look at the expenses. An extra dollar to more marketing
isn't always necessarily frowned upon. But an extra dollar to a cost is always
considered avoidable.

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anigbrowl
Not as much as losing a liability lawsuit. Good customer service is partly a
marketing exercise - in the sense of spending some resources on avoiding
negative publicity. But shuffling it around from one cost center to another is
essentially a form of defining the problem away, and it's not a good
foundation to build on. 'Sure, you feel unhappy with our product now, but try
thinking of yourself as being happy instead.' If you define it as marketing
then you're just going to get a customer service experience featuring
relentlessly happy people who refuse to admit the product could have any
shortcomings.

Search on 'sirius cybernetics corporation'.

~~~
commandar
>If you define it as marketing then you're just going to get a customer
service experience featuring relentlessly happy people who refuse to admit the
product could have any shortcomings

Other than the happy part, this varies from most customer service departments
how?

