Kazira

Times are tough. Sales are down. Budgets are being slashed. In times like these, how are you going to sustain those high services levels that your customers got so used to getting? Just a while back, you were doing really good and spending all kinds of money on resources and initiatives that helped you get those coveted JD Power awards, Fastest Growing Company recognitions, etc. Now that the environment is not so friendly, you’ve been asked to cut and rip through every line item on your customer operations budget and that means cutting back on 24x7 support, live chat, promotional campaigns, free returns, store specials, etc. But are you sure that is smart thing to do? Do you really want to take the risk of alienating your current/potential customers when, across the board, demand is on the decline and customers are thinking twice about their purchases/brand-loyalties?

Customers are like kids – once they start liking something, they do not like when it is taken away, when the fact is that they want more of it! Don’t blame them – you are the one who rolled out the red carpet in the first place and told them that you will treat them better than the competition. Now that the weather conditions are not that favorable, you want to pull that carpet. Not so fast my friend, unless you are thinking about getting out of your business.

So the next logical question is how should you go about designing a more optimal, cost-effective, and satisfaction-focused customer support program? It depends on the answers you come up for the following questions -

1. How important/critical is customer satisfaction to your business and brand? How does it impact sales, profitability, customer churn, customer retention, etc.?
2. How competitive is your environment? Meaning, how easily can people trade-down/up or substitute for your product(s)?
3. How much does it take to acquire a new customer? How much does it take to keep an existing customer?
4. How complex is your product? Is it simple to work with and trouble-shoot or is it difficult?
5. How visible is your product? Is it something that sits in a corner, inside a room, or is it something that is out in the open?

Once you start asking the above questions (and more), you will start to understand the linkages between customer satisfaction and sales, profitability, brand equity, stock price, talent retention, inventory levels, product returns/recalls, call center utilization, etc. Here is an approach you may want to utilize when in the process of re-designing your customer support operations –

1. Start by documenting what I call “Customer Satisfaction Drivers” (CSD) that are specific to your line of business. CSDs are performance metrics like Average Response Time, Average Resolution Time, MTBF (Mean Time Between Failures), etc., which you strive to measure and control since they tell you how well/poorly you are performing.
2. Next understand the true costs of supporting your customer operations. I strongly urge that you use something like an ABC (activity based costing) approach so that you are accounting for each and every task that contributes to the customer operations.
3. Build the linkages between the activities that are done to support customer operations and the end benefit/outcome of the activity to the customer, company, and partners. To get an idea of what I am suggesting, check out the Strategy Map that I had published in one of my earlier blog postings.
4. Once you’ve captured the CSDs, estimated the costs, and documented the benefits, conduct a cost-benefit analysis of every support activity and prioritize it accordingly. You will need to utilize some sort of weighted average approach that gives every activity a single score that encapsulates both the cost and the benefit of the activity. Be sure to map the appropriate CSDs to each activity.
5. Finally, create a “Customer Value Wagon Wheel” (i.e. a pie chart) that will visually tell you what activities provide your organization with a highest ROI. You will now have a more scientific and data-driven model to have any discussions on cost cutting and their resulting impact on business.

If you follow the above approach or something similar to it and be diligent in its execution, there is no reason why you can’t start driving your support costs down while sustaining the Customer QoS (Quality of Service) and scores. Be sure to comment on my ideas and contribute your own.