Customer loyalty and retention is crucial to the sustainability of a business, especially for a small business trying to expand. A 5% increase in customer retention equals a 25% increase in profit because the average spending of a repeat customer tends to be higher and happy customers often act as ambassadors for the brand within their network.
So what makes a casual customer into a loyal ambassador? 61% of customers designate product quality as the most important factor, followed by price and service quality. However, negative customer support can have a devastating impact on the customer’s relationship with and perception of the company. 80% of customers will share negative interactions with others while only 50% will share positive interactions. All things equal, customers will switch to another brand with superior customer service.
Understanding the nuanced impact of customer service quality is important for companies as to not under- or over-invest in customer service functions. Underinvestment can lead to loss of existing customers, forcing companies to incur additional costs on customer acquisition. Overinvestment, on the other hand, can lead to wasteful expenses with low ROI.
In order to offer the most cost effective customer support, a business should:
- Understand the customer service cost structure and ROI
- Assess the nature of customer interactions
- Identify the most effective channels
- Determine automation opportunities
- Continuously collect valuable customer feedback
1. Understanding the cost structure and ROI
The cost of customer service depends on the human and technological resources you employ to handle customer interactions. To best understand the right support model for your business, you should look at both the cost and ROI.
For cost, you want to consider the cost of the important tools such as phone systems, website content maintenance, and chat capabilities. Then you want to calculate the people cost of customer service agents who handle various customer interactions throughout their lifecycle. The ROI of these costs or investments to build customer loyalty can be estimated based on their average spending (repeat purchases), returns, and referrals. A more granular assessment to determine which interactions have the highest impact on customer retention or satisfaction to help you prioritise most critical interactions to focus on.
2. Assess the current customer interactions
Understanding what your customers’ pain points are and best resolution steps required to resolve them can help you design the right customer support structure. Not all interactions are urgent or even important. All touchpoints with customers will have some (subtle or memorable) impact on customer perception of your brand but there will be certain types of interactions that will be more than others. Depending on the product or service you offer, the kinds of common questions or complaints will differ.
For instance, a meal kit delivery service company may often get customer concerns about delayed, damaged, or incomplete deliveries. These interactions will require the company to obtain real-time updates on delivery status with courier partners. Customers may complain about getting sick after consuming the food which should trigger a serious investigation into food prepping procedures and refunds/repayments to remedy the situation.
3. Identify the right channels
Once you have properly categorized the interaction types and their criticality, you can then determine the right support channels and resources to offer. For more critical or urgent matters, you may want to offer access to customer service agents to provide more empathetic human contact so that customers feel cared for. For simpler queries, a simple FAQ page or instructional content could suffice.
For agent-customer interactions, there could be various channels available to accommodate customer preferences. Phone, chat, and email are the most commonly used channels. Each channel has a different cost which could depend on the effectiveness of the communication ease but on average cost per contact is $8.01.
4. Determine where you can automate
The most cost effective channel is self-service via a customer visit to the website, which costs about $0.10. Issue types which tend to be pretty consistent (i.e., not many edge cases) across all customers can be easily resolved by reading a simple article on the website. Most customers also prefer to get these questions answered without having to contact the company so the ROI of self-service can be significant.
You can add automated features in phone and chat channels as well to redirect customers with simpler questions to less costly channel interactions. You can have these capabilities added from your business phone service provider at affordable prices.
5. Collect and analyze customer feedback
Having a healthy feedback loop to collect and analyse customer feedback will allow a business to reassess its customer support strategy timely. Surveys and customer sentiment analysis tools can help collect and store various customer feedback. Getting insights from customer agents who interact with customers on a daily basis is also an easy way to determine most critical customer pain points. Keep in mind that customer feedback often helps you identify improvement areas in your products and operations and incorporating the feedback into continuous business changes will not only reduce the contact volumes but also help strengthen profits and brand value.