THE CUSTOMER SERVICE PROFIT CENTER:
ACHIEVING ZERO COST CUSTOMER SERVICE
When a company has worked hard to create revenue on the front end, it makes sense to retain it on the back end. This requires a shift in thinking - to the concept of customer service as a profit center.
For many direct-to-consumer companies, customer service is defined as a cost center. As a result, the focus is on minimizing costs through the use of low quality offshore call center solutions, and/or through minimizing available agents (resulting in long customer wait times). As a result, not only is the customer experience poor, but returns soar, new and repeat orders are often lost, sales cannot be saved, and thus overall revenue is decreased. Many companies do not realize that this strategy decreases their overall net profitability and product lifespan.
The profit center model for customer service works well for any product where lifetime value is a priority, and also for "one shot" products with an average order value of $50.00 per transaction or more. Utilizing product-specific encouragement and save-the-sale techniques, it's possible to achieve revenue-to-cost ratios up to 3.5:1 (i.e. $3.50 in revenue generated for every $1.00 in call center cost). Thus the call center becomes "cash positive" and effectively free - all while providing an excellent customer experience.
Also, it's important to realize customer service generated "save" revenue goes right to the bottom line - the media cost to capture the customer order has already been incurred, and often any returned goods cannot be resold. Therefore, any revenue retained has no costs offsetting it other than the direct cost of customer service itself.
Saving an order begins with having a knowledgeable agent available to talk to the customer and provide encouragement in the proper use of the product. From there, techniques have to be created that are specifically tailored to the unique qualities of the product. A save program requires dedicated agents, extensive product training, proper agent incentives, constant call monitoring, benchmarks, and many other techniques to become successful.
Returns are the other part of the equation. Implementing an effective system for enforcing Returns Merchandise Authorizations (RMA's) on all returns, and correctly measuring trial and warranty periods, can result in a reduction of up to one-third of your returns with no appreciable impact on chargeback rates.
DVM has extensive experience in creating and managing successful Save and Returns Management programs for large scale direct response promotions. Call us to discuss your individual needs.