Why Customer Support is an Investment, Not an Expense!

  • What is Customer Support?
  • Why invest in Customer Support?
  • How to manage Customer Support costs
ROI of customer support

Running a customer support team obviously incurs some costs. For businesses on a steep growth spurt, this cost can easily get out of hand. In order to keep costs, manageable business managers have to prioritize some over others. A big mistake is to consider customer support as a cost rather than an investment for your business.

In this article we’re going to look at why businesses need customer support, why invest in customer support, and how a customer support desk can help.

What is Customer Support?

Customer support is basically any form of mediation you offer to customers to smoothen out the use or purchase of your product or service. Broadly this covers customer queries both before and after sales. Customer support is the backbone of some industries, mainly, Software, Edtech, and technical services. For others, it’s a must-have to ensure a quality customer experience.

In general, you can classify customer support into proactive and reactive classes. It’s important to have both as part of your customer support strategy. While reactive support deals with customer complaints as they come in, proactive support deals in a preemptive manner. 

For most businesses, you need a combination of the two to offer reliable support.

Why invest in Customer Support?

Investing in customer support is not a matter of if but rather how much. In this day and age where 50% of customers will leave after a poor support interaction, there is no way but to invest in customer support. However, investing in customer support isn’t only about satisfying customers in the short term. It can have some serious long-term impacts as well, such as,

Improved retention rate

Investing in customer support is a great way to improve customer satisfaction. More satisfied customers tend to stick to a business, and that is one of the primary goals of customer support. By improving customer satisfaction you can retain more customers in the long hauls. 

Based on the 80-20 principle, almost 80% of your revenue comes from 20% of your customers. In order to satisfy and retain these customers, there’s no choice but to invest in customer support.

Improved loyalty and advocacy

Similar to retention, more satisfied customers tend to become advocates and loyalists. If you ask marketers, there is no better marketing than word-of-mouth from existing customers. Investing in customer support improves your chances of building meaningful relationships with customers that will take up advocacy.

People are always more likely to value a good support experience even if the product is not the best on the market. Customer support has the ability to make good on most shortcomings that your product or service might have.

Reduced acquisition pressure

More retention and loyalty means you can take the pressure off acquiring new customers. Acquisitions cost is a significant expense for running a business. Investing in customer support makes it so you can have a low acquisition rate and still bring in a good revenue figure.

This happens in two ways. One is by reducing customer churn. Customer churn is the opposite of customer retention. The lower your churn rate is the higher the chances of getting repeat customers. Repeat customers are the easiest to please and that significantly improves customer loyalty.

Two, it reduces the cost of acquisition by reducing the pressure on your acquisition funnel. Higher retention and a low churn rate give you a chance to go for higher margins with less acquisition investment.

In a way, this can reduce the overall business expenses too!

How to manage customer support costs?

As a business, you have to take into account a number of factors to effectively manage customer support costs. For this purpose, we’ve put together 3 ways to effectively manage customer support costs. 

Calculate customer support costs

In order to manage customer support costs effectively, you need to first accurately calculate the cost of customer support. This usually means measuring the spending of each customer. The basic formula for customer support cost is,

Customer support spends/number of tickets = cost of support per ticket.

You can calculate this cost on a per customer, per ticket, and per order basis depending on what suits your business. Only after tracking customer support costs for a significant amount of time can you minimize the costs for higher margins.

Track KPIs for your support team

Other key metrics to measure besides your support costs are customer acquisition costs, customer retention costs, customer lifetime value, etc. Besides these expenses, you need to evaluate the performance of your teams as well. To measure customer support performance you should take a close look at first-response rates, average handling time, daily resolve rates, and such.

These metrics provide key insights into how well your support team is performing. They also help you figure out where the failings are and what you need to do to overcome them.

Invest in a good help desk system

A good customer support desk can significantly reduce the overall costs of customer support. While that’s true, a good support ticketing system can leave a larger impact. A good support system enables your customer support agents with,

Detailed Reports; Helps track KPIs to evaluate both individual and team performance.

Smoother collaboration; Enables smooth collaboration with agent status, activity logs, internal notes, and bookmarks.

Automation; Lets agents automate mundane routine tasks to free up time to solve complex issues.

Faster responses; Enables faster responses from agents, reducing average response times and improving most KPIs.

Wrapping Up

While many businesses still consider customer support as an expense, it’s one that you can hardly ignore. Due to having such a huge impact on the bottom line, customer support is clearly not just an expense. Because, unlike most expenses, customer support can improve your margins significantly.

Only considering the benefits of excellent customer support at face value doesn’t reflect the true benefits. Rather you should consider customer support as a way to reduce stress on other departments of your business. Less stress means fewer resources and that can significantly alter your bottom line.

The idea isn’t about just maximizing the output of your support teams. It’s more about maximizing the output to compensate for less expenses on other fronts.

WPManageNinja Editorial Team

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