Aug 24, 2021 | 5 Mins read
How to calculate the ROI of efficient customer support

Research has shown that it costs 5x more to acquire a new customer than it does to retain one. Read on to see why this statistic holds true. Customer support is one of the most important touchpoints in a customer’s journey and a powerful way of providing them with a great experience of your product or service. Ignore or underestimate its value at your peril!

Quantifying the ROI (Return on Investment) of investments into your customer support function requires a holistic approach. ROI itself provides a means of calculating what you stand to gain from investments in support agents, software, tools, and training for your team. The purpose is to accurately justify how and where monies should be spent to optimize the potential value of the investment for your business. Get this wrong, and you might end up with customer support processes that reduce employee productivity and the quality of the service provided,  ultimately resulting in poor experiences for the end customer. So, how can you avoid this?

To calculate the ROI, organizations need to focus on quantitative indicators like the number of upgrades, renewals, retention rates, and recommendations. Companies will need to follow a couple of steps to successfully calculate the ROI of customer support.

1. Decision-makers need to pay attention to the amount of investment being put in customer support processes over a given period of time. 

2. Identify and determine the specific metrics that will be measured. They also need to focus on how much was earned from the specific metrics that are decided on.  Some metrics that can be measured include:

  • Customer upgrades: Organizations can calculate how many customers upgraded from a lower-tier to a higher-tier subscription or how many moved from a free trial to a paid subscription after interacting with support. 

  • Customer retention: The number of monthly or annual renewals or re-purchases by existing customers can be measured. Companies can check if these existing customers have approached support or have been proactively approached by support to resolve any issue or questions. 

  • Net Promoter Score (NPS): Companies can measure customer loyalty by looking at their Net Promoter Score. NPS shows the likelihood of customers recommending the company’s product or a brand in general to others. This can be measured by simply asking the customer in a survey or even at the end of a support interaction. It  can take the form of a 1 - 10 ratio with the question - “How likely are you to recommend our product or service to others?” To get the NPS, subtract the percentage of detractors from the percentage of promoters.

  • Employee productivity: Here, the focus is on how much time is being saved by support agents due to resolving support tickets faster, solving support issues, and proactively reaching out to the customer before the issue is known. Companies can save money on manual labor especially when support is supplemented with AI-powered software. 

3. Test the defined measurements with new investments. Let’s take an example. A company invested in IrisAgent to boost its customer support processes. After implementation, the time to resolve support tickets went down from 8 - 9 hours with possible engineering escalations to 1 hour without escalations. This improved time to ticket resolution, which subsequently improved customer satisfaction scores, and leads to increased customer retention. Simple! This doesn’t even factor in the new value created by reallocating treasured engineering time to other important tasks.  

What are the business values of customer support?

  1. Increased Profits: Previously, customer support may have been seen as a cost center. However, companies actually stand to increase their profits through customer support channels and interaction. Revenue can come from increased sales via referrals, low customer churn, and customer upgrades or cross-sells. Providing excellent customer support not only helps to improve customers’ experience with the company’s products but increases the likelihood of them wanting to buy more products or renew their subscriptions. They may even be open to paying more for the privilege!  

  2. Saves time and resources: As investments in technology enable increases in employee productivity, support agents will be able to resolve more support tickets, more quickly -- and even proactively resolve issues before they are known! Reducing the time to resolve tickets also eliminates the need to hire more support agents.  By investing in effective technologies, support teams can also improve their processes and workflows with automation. They can easily identify redundant processes and eliminate them. For example, IrisAgent’s automated tagging feature removes the need for manual categorization and tagging. 

  3. Long-term business relationships: Delightful customer support leads to long-term customers. This can increase a company’s Customer Lifetime Value (CLV). CLV is the total value of a customer to a business over the entire business relationship. Ideally, companies want to earn more from a customer over time so it covers the cost of getting the customer with additional profits. It is cheaper to retain customers than to acquire new ones. Thus, it makes sense to invest in building relationships with existing customers and keeping them satisfied and delighted with positive experiences.

  4. The statistics say it all:

  • 81% of companies that use customer experience as their differentiator reported an 84% increase in revenue, a 79% increase in cost savings, and a 92% increase in customer loyalty - Dimension Data. 

  • By implementing AI-driven knowledge base tools, companies have improved the first-contact resolution by 5 - 7%, reduced handling time by 20% to 30%, and reduced new-hire training time by 25% to 40% - BCG.

  • The probability of selling to an existing customer is 60 – 70%, while the probability of selling to a new prospect is 5 - 20% - invesp.

As companies become more customer-centric and customers make ever more intentional buying decisions, it’s more important than ever for companies to proactively invest in improving their customer support processes. Effective modern software is a great place to start. 

IrisAgent takes customer support to a whole new level by using product and user context to identify trending issues and take proactive steps to resolve issues before they become problems. To get a demonstration of how you can get a substantial ROI from IrisAgent,  request a demo today!

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