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A Comprehensive Guide for Measuring Customer Service ROI


For many people, “customer service” evokes the memory of the hold tone while waiting for their query to be answered. Thankfully, we’re past those days. Now, customer service can easily be bifurcated into two categories. First are the experiences that always delight you, meet your expectations, and turn you into a patron. On the flip side, there are experiences that make you want to jump ship.

Although quality customer service is crucial to building a successful business, it’s still viewed as a cost center. That is why only a handful of companies manage to get it right. Do you want to be one of them? Then you must pay close attention to your customer service ROI.

But calculating it is easier said than done. So, before we get to its weeds, let’s look at how stellar customer service can catapult your business outcomes.

The ROI of Great Customer Service

1.Upselling & Cross-Selling Opportunities

According to HBR, bringing a new customer onboard is somewhere between 5 to 25 times more expensive than retaining an existing one. What’s more, the likelihood of selling to an existing happy customer is up to 14x higher than selling to a new customer.

Therefore, it’s intrinsic for your customer service team to realize they’re in the CX battlefield. Once they are aware of the strategic role they play and how it impacts the organization, they will be motivated to go the extra mile to ensure customer happiness.

2. Building Sales Acumen

Your customer service team can uncover a goldmine of customer insights that encapsulate their buying behavior, issues, where your company can help more, and so on. Sharing this information with your sales reps helps them better understand the customer’s sentiments and enables them to drive sales. They can also use these insights to strengthen relationships and optimize their sales strategy.

3. Lowering Agent Turnover Rate

Customer service is hard. Period. Service reps are often overworked (swamped with tickets) and overlooked (outdated technology)—two things that sound a death knell for employee engagement. However, communicating the impact of their efforts and how important they are to the organization can significantly improve their morale and lower attrition rates. Additionally, promoting customer self-service will also offload a big chunk of work for the support agents.

4. Fostering Customer Loyalty

If you fail to pay the attention your customer service efforts deserve, you could land up in a similar situation:

Wonderful people at u/BTCare just called, kept me on hold for 40 minutes and STILL failed to grasp the issue.

— Andy N (@Mr603) August 31, 2017

On the contrary, here’s an example of great customer service right out of Rackspace’s book. One of their support agents heard a customer tell her colleague that she was hungry. The agent quickly ordered them a pizza. The agent’s little foresight completely changed the narrative. All of them were still on the phone when it arrived 30 minutes later, but the customer was elated.

Neglecting or upsetting a customer is much more than just losing one sale. It snowballs into a series of grave problems, namely lost revenue, distrust, turnover, disengagement, lower productivity, frustration, negative reviews, etc.

Now that we know the impact of stellar customer service, let’s dive deep into the various ways of measuring and establishing it.

How to Measure the ROI of Your Customer Service?

There are three main steps for establishing and measuring the ROI of customer service. Here they are:

1. Establish Your Goals Upfront

Without clear and defined goals it becomes extremely difficult to monitor your progress on your path to delivering stellar customer service. The goals can vary in accordance to your business, but most teams look at customer service ROI in the following ways:

Existing Customer Upgrade: When existing customers are willing to spend more and transition from free to a paid version solely because your support teams helped them understand the products and services better.

Customer Retention: Customers renewing the services annually because they are engaged and happy with the support they receive.

Advocates: Customer service can also work as a marketing channel where happy and satisfied customers publicly share their experience or success stories with your products or services via webinars or recommendations, etc.

2.Identify Key Metrics and Elements

ROI majorly consists of two things: the amount invested and the value you receive from that investment. Although it's easy to calculate the monetary value associated with customer service assets such as staff cost, tools, etc., assessing the gains is a tad bit difficult. In other words, rather than calculating it using one empirical formula, it’s better to monitor some KPIs to gauge the effectiveness of your strategy. These include:

Cost per Ticket

Net Promoter Score

Average Handle Time

First Contact Resolution Rate

Additionally, indirect contributions made by your customer support professionals must also be considered. Some of them are:

  • Number of bugs reported
  • Product feature suggestions made live
  • Leads that came through support

Measure and evaluate all these metrics perpetually to ascertain the success of customer experience. What’s more, work towards improving these metrics wherever required and turn the tide in your favor. If you’re looking for ways to improve your contact center quality, then this ebook is for you.

3. Analyze Customer Sentiment Analysis

Sentiment analysis is a process for contextual mining of text that analyzes user data to understand sentiments regarding an organization’s brand, product or service. Doing so enables your business to zero in on areas of improvement while highlighting your strong suits. In the words of Derek Sivers:

Customer service is the new marketing.

There are multiple tools that enable sentiment analysis and catapult proactive customer service. They also prioritize social messages based on their sentiments. If you’re interested to know more about this topic, this post will come in handy.

Want to Improve The ROI of Your Customer Service? Add AI to the Mix

When delivering great customer service at scale becomes a challenge, real AI emerges as the solution. Customers progress through multiple stages in their complete journey. This comprehensive customer experience ebook focuses on three key post-sales stages, namely - Onboarding, Nurturing, and Retention. It will equip you with a gamut of ways to deliver superlative customer experiences with AI at each stage.

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