Case | HBS Case Collection | 2011 (Revised from original 2005 version)

Understanding Customer Profitability at Charles Schwab

by Francisco de Asis Martinez-Jerez

Abstract

Charles Schwab is transforming into a customer-centric organization. Central to this cultural and organizational change is the utilization of customer profitability at different decision-making levels. Examines several technical aspects of the ABC cost system, as well as the change in budgeting and performance measurement introduced by the new profitability system. The system also shows how ABC informs segment and individual customer decisions (such as pricing or process improvement). Also examines Charles Schwab's necessary organizational changes (incentives, decision rights, etc.), as customer centricity is implemented throughout the firm.

Keywords: Activity Based Costing and Management; Budgets and Budgeting; Change Management; Customer Relationship Management; Customer Value and Value Chain; Profit; Organizational Change and Adaptation; Organizational Culture; Performance Improvement; Motivation and Incentives;

Citation:

Martinez-Jerez, Francisco de Asis. "Understanding Customer Profitability at Charles Schwab." Harvard Business School Case 106-002, January 2011. (Revised from original July 2005 version.)