Case | HBS Case Collection | July 2005 (Revised January 2011)

Understanding Customer Profitability at Charles Schwab

by Francisco de Asis Martinez-Jerez


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


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