{"id":222,"date":"2020-05-14T17:56:06","date_gmt":"2020-05-14T12:26:06","guid":{"rendered":"https:\/\/eglobalsoftsolutions.com\/blog\/?p=222"},"modified":"2020-05-14T17:56:06","modified_gmt":"2020-05-14T12:26:06","slug":"what-is-customer-service-roi-and-how-to-measure-it","status":"publish","type":"post","link":"https:\/\/eglobalsoftsolutions.com\/blog\/what-is-customer-service-roi-and-how-to-measure-it\/","title":{"rendered":"What Is Customer Service ROI and How to Measure It?"},"content":{"rendered":"\n
\"\"<\/figure>\n\n\n\n

Departments are usually divided into profit centers and cost centers in the business world. Where profit centers are bound to produce direct profit for the company, cost centers refer to the part which does not directly generate profit and costs money to the company to operate. Due to limited funding, businesses often distribute more money from their budget to areas that are profit centers.
This often puts the customer service teams in a situation where they are left overworked and underpaid. Since they cannot cut short their assigned work, they can still have a stronger role to play in the budget meetings, if they can show a solid return on investment. Concluding, customer service ROI should be a standard measurement for every team.<\/p>\n\n\n\n

What Is the Return on Investment (ROI)?<\/strong><\/h6>\n\n\n\n

The Return On Investment (ROI) is a measurement method that compares earnings to the expenditure of a company. ROI can be calculated using a simple formula [(Profit \u2013 Expenditure)\/Expenditure] x 100. <\/p>\n\n\n\n

Let\u2019s assume, a company invested $100 in customer service and, in return, made a profit of $150. Filling these numbers into the calculation, (150-100=50), (50\/100=1\/2) and (1\/2×100 =50). The ROI here is 50%.<\/p>\n\n\n\n

Although the calculation here seems pretty much simple, getting the accurate number for accounting can be a real tough job for the team.<\/p>\n\n\n\n

Calculating ROI: Simple Yet Complicated<\/strong><\/h6>\n\n\n\n

There are\ntwo basic things that you need to know for calculating ROI.<\/p>\n\n\n\n

  1. Money invested<\/li>
  2. Profit made by it<\/li><\/ol>\n\n\n\n

    In the case\nof a sales team, calculating ROI is simple and easy. Let\u2019s say a company\nemploys a sales executive for $1000 a month, and in return, he brings revenue\nof $5000, now this is a great return. There are more details involved than just\nthis, but it is easy to tell if a sales executive is generating profit. Since\nhis daily work can be bound with the profit, they generate directly.<\/p>\n\n\n\n

    However, in\nthe case of a customer service team, it is easy to figure out the cost of\nstaff, tools, and other things. But, getting the exact number of profit gained\ncan be challenging. Since the customer service team doesn\u2019t directly produce a\nprofit, instead, they work with the pre-existing customers who are already\nconsidered in terms of ROI.<\/p>\n\n\n\n

    Obviously, the customers would prefer to give their money to the companies who look after them. Thus, implying that excellent customer service does correlate to a successful business. Yet, the real challenge to find out the exact portion of the company\u2019s profit that the customer service team is responsible for remains still.<\/p>\n\n\n\n

    How Does Customer Service Generate ROI?<\/strong><\/h6>\n\n\n\n

    The customer\nservice teams generally generate ROI in the following ways:<\/p>\n\n\n\n

    1. Boost<\/strong> \u2013 The customer service team makes the existing customers understand the company\u2019s services better, which is why they spend more money in the organization.<\/li>
    2. Retain<\/strong> \u2013 Due to the great support by the customer service, the customers tend to stay longer with the company.<\/li>
    3. Growth<\/strong> \u2013 The customers share their great experience with the company with others. This would not have been possible without customer service, which here aided in marketing.<\/li><\/ol>\n\n\n\n
      How to Measure Customer Service\nROI?<\/strong><\/h6>\n\n\n\n

      Based on\nthese ways, you can measure customer service ROI.<\/p>\n\n\n\n

      Decide Your Team Approach and Customer Actions.<\/strong><\/h5>\n\n\n\n

      Prepare a\nproper plan. Think about the areas you would like to work on and accordingly\ndecide what should be your team approach to get those customer actions, which\nin turn will generate boost, retain, and growth income.<\/p>\n\n\n\n

      Supposedly,\nfor any website, the customer actions can be:<\/p>\n\n\n\n

      • Switching\nfrom its Standard plan to the Premium plan (boost).<\/li>
      • Signing\nup for another year of service (retain).<\/li>
      • Mentioning\nabout its products or services they loved in reviews or blogs (growth).<\/li><\/ul>\n\n\n\n

        Think of as\nmany actions as you can and make a list of steps that the customer team should\ntake to have a tremendous positive impact on these customer actions. And then\ncombine the team approach with the customer actions, like \u201cWhen the team\ndelivers quality services to the customers constantly, our customers will:<\/p>\n\n\n\n

        • Not\ncancel their monthly subscription.<\/li>
        • Buy\nproducts and services more often from us.<\/li>
        • Tell\nabout their excellent experience with others via social media or in person,\nleading to more new customers.<\/li><\/ul>\n\n\n\n
          Make Reports and Change Accordingly.<\/strong><\/h6>\n\n\n\n
          1. Net Promoter Score<\/strong> \u2013 Probability of the customer recommendations you might get.<\/li>
          2. Customer Satisfaction<\/strong> \u2013 Is your service great enough to prevent your customers from going for alternatives?<\/li>
          3. Cost per contact<\/strong> – Refers to the cost incurred to the company for answering each customer.<\/li>
          4. Cost per conversation<\/strong> \u2013 Calculate this by using the formula- Cost per contact x Average number of interactions in each conversation.<\/li>
          5. Customer lifetime value<\/strong> \u2013 The time a typical customer spends as your customer.<\/li>
          6. Retaining rates<\/strong> \u2013 Percentage of active customers from last month who are still active in the current month.<\/li>
          7. Rates of contact<\/strong> \u2013 Percentage of active customers who require to get in touch with customer support for any issue in a typical month.<\/li>
          8. Contact rate by area<\/strong> \u2013 Break down your contact area by product area, which will help you understand the cause better.<\/li><\/ol>\n\n\n\n

            You can reach out to a business analyst who can assist you in finding these accurate metric numbers.<\/p>\n\n\n\n

            Assess the Indirect\nReturns From Customer Support<\/strong><\/p>\n\n\n\n

            Customer Support is not just about answering customer\u2019s questions; you can also benefit from it by treating it like a reliable source of information. For instance, with every conversation, you can learn about customer feedback or the impression of your products among them or areas where you lack efficiency.<\/p>\n\n\n\n

            You can bring some considerable changes according to your evaluation such as;<\/p>\n\n\n\n

            • Number\nof reported errors<\/li>
            • Suggestions\nreceived<\/li>
            • Sales\nlead generated<\/li><\/ul>\n\n\n\n

              Making a Testable ROI\nThesis<\/strong><\/p>\n\n\n\n

              Once you\nhave figured out the customer actions that your support team can make an impact\non and how it will benefit the company, you can proceed with some small\nexperiments. In this way, you will be able to create more reliable data and\nlook forward to the improvements in the meantime. Eventually, this will make\nyour ROI calculation more solid and help build more robust customer support.<\/p>\n\n\n\n

              Every Customer Service\nROI Has Different Return Rates.<\/strong><\/p>\n\n\n\n

              After all\nthis, there is one thing that must be kept in mind that every customer service\nROI will have different return rates. You cannot expect it to be the same every\ntime. However, investing in customer support means there must be measurable\nfinancial profits to be achieved, even if they can\u2019t be broken down to a single\npercentage. Get ready to do a lot of ROI measurements.  \n\nSo this was all about\nthe Customer Service ROI and the steps to measure it. We hope this blog helps\nyou in establishing more impactful customer support and solve your doubts\nregarding the same. Do share your views about this in the comment box below!\n\n\n\n<\/p>\n","protected":false},"excerpt":{"rendered":"

              Departments are usually divided into profit centers and cost centers in the business world. Where profit centers are bound to produce direct profit for the company, cost centers refer to the part which does not directly generate profit and costs money to the company to operate. Due to limited funding, businesses often distribute more money […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":true,"template":"","format":"standard","meta":[],"categories":[49],"tags":[17],"_links":{"self":[{"href":"https:\/\/eglobalsoftsolutions.com\/blog\/wp-json\/wp\/v2\/posts\/222"}],"collection":[{"href":"https:\/\/eglobalsoftsolutions.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/eglobalsoftsolutions.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/eglobalsoftsolutions.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/eglobalsoftsolutions.com\/blog\/wp-json\/wp\/v2\/comments?post=222"}],"version-history":[{"count":1,"href":"https:\/\/eglobalsoftsolutions.com\/blog\/wp-json\/wp\/v2\/posts\/222\/revisions"}],"predecessor-version":[{"id":224,"href":"https:\/\/eglobalsoftsolutions.com\/blog\/wp-json\/wp\/v2\/posts\/222\/revisions\/224"}],"wp:attachment":[{"href":"https:\/\/eglobalsoftsolutions.com\/blog\/wp-json\/wp\/v2\/media?parent=222"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/eglobalsoftsolutions.com\/blog\/wp-json\/wp\/v2\/categories?post=222"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/eglobalsoftsolutions.com\/blog\/wp-json\/wp\/v2\/tags?post=222"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}