Every company is in business to make money. One of the best ways to generate a solid profit is to take care of your customers. The input costs are low; the returns are good. This is true whether the customer interaction is face-to-face or over the phone. However, customer care is a complex area.
Smart Business spoke with Paul Derbyshire, director of strategic marketing at InfoCision Management Corp., about the issues of customer care and the potential return on investment of a well-planned customer care initiative.
How low are customer care input costs?
When considering the cost of your customer care activities, spending the ‘talk time’ to introduce new products and services through a thoughtful, coordinated cross-sell program more than pays for the additional per-minute cost, effectively turning customer care into a profit-generating activity instead of a cost center. The budgets that companies allocate to handle customer care are substantial and, as a result, the trend historically has been to pursue a unilateral cost-minimization strategy. From putting the squeeze on talk times and employing impersonal IVR (interactive voice response) solutions for in-house centers to courting less effective, less costly third-party solutions from the other side of the world, the perception that a customer care solution must remain a cost center has become firmly rooted in corporate psyches.
Is customer care generally an expense or a profit-maker?
We have taken a more holistic approach to serving clients, adopting the philosophy that customer care applications need to be viewed as profit-generating activities. We’re not talking about hard-to-define metrics like customer loyalty and brand image here; we are talking about real revenue generated by the cross-sale of appropriate products and services that fit with your customers’ needs and wants.
So beyond warm-and-fuzzy relationships, are there hard-dollar returns?
A customer who calls your inbound customer care line and receives assistance that satisfies his or her needs is the most receptive candidate for a cross-sell — more receptive than if you had placed an outbound call or sent that person a mail piece. Adding a well-thought-out matrix of add-on products and services to your customer care process can turn this costly but necessary service into a profitable activity, covering the call center costs and providing a profit back to your enterprise.
Do you have some numbers to back that up?
Consider the following example (see table) of a customer care program we run for a nationally recognized bundled media services provider. We proposed a shift in strategy away from cost minimization toward profit maximization by using additional talk time to cross-sell add-on services. Before cross-selling products, InfoCision was handling the customer’s service questions and politely exiting the call. With a talk time of 5.5 minutes, it was costing our client $4.13 per call that came in. Over the course of the 99,696 calls received during this period, the billing and, in turn, the cost to our client was $411,744.
After adding a series of cross-sell opportunities, which were tailored to the services the customer already had, we handled 126,220 customer care calls. Because of the extra talk time necessary to cross-sell these products, our talk time increased to seven minutes per call, thus the billing to our client was $5.32 per call. The annualized net income that we generated through the sale of these add-on services was equal to $8.25 per call, meaning the client’s customer care was essentially free and, in addition, it received $2.93 in profit for every call that used to cost the client $4.13. Everyone wins in that scenario.
PAUL DERBYSHIRE is director of strategic marketing at InfoCision Management Corp. Reach him at firstname.lastname@example.org.