For almost a decade, I was afraid of trying to make the customer service team at Less Annoying CRM more efficient. CS has always been one of our biggest differentiators, and I worried that by making it more efficient, we'd end up making it worse and lose our competitive advantage.
Over the last year, we finally started focusing on efficiency. The results are hard to believe:
- We have more customers than ever, so you'd expect our support load to be higher.
- We've reduced the number of contact forms we get by 50%.
- Our CS team went from nine to seven employees (two people moved to other areas in the company). Each individual support rep is no busier now than they were a year ago.
- Our customer happiness score is at an all-time high, and we regularly get feedback like this message a customer recently sent us: "Your customer service and support is the best of any team I work with (and that's a bunch)."
Over the last year, our customer service has become more efficient and better at the same time. How is that possible? Read on...
Customer service is not a cost center
This is a bit of an over-simplification, but you can categorize the different functions within a business as either a profit center or a cost center.
- A profit center is something that makes you more money the better you are at it. For most businesses, this includes sales and marketing, but potentially also other things like product design. Smart business leaders know that to improve a profit center, you focus on making it better rather than making it cheaper.
- A cost center is something that must be done, but there's no real advantage to being really good at it. For example, at LACRM, we have to file taxes each year, but we don't get anything out of being really good at filing taxes. In cases like this, it makes sense to reduce costs as much as possible while still maintaining "good enough" quality.
The fundamental customer service mistake that most businesses make is viewing it as a cost center. They think they need to offer some customer service, but they want to spend as little as possible so they can invest more in other parts of the business (or just enjoy better profit margins). In the short-term this works, but having bad customer service ultimately erodes customer trust, reduces word-of-mouth growth, increases churn, and ultimately limits a business's potential.
This mindset is why making customer service more efficient so often results in making it worse. Businesses are optimizing for the wrong thing. So what should they be optimizing for?
Reduce waste, not cost
It uses electricity to have the lights on in your house. Does this mean that turning on the lights is a waste of electricity? Well that all depends. If it would otherwise be dark, and you need it to be light, it's not a waste at all. But if you're not even home, having all your lights on is probably a waste.
Every business spends time (and/or money) on customer service. Some of that time is spent genuinely helping customers. If you broadly try to reduce costs, you will probably end up accidentally reducing some of that "good" time you're spending, and your CS will get worse as a result.
Instead of reducing costs, reduce waste. Reducing waste means identifying the things you're spending time on that don't provide any value to customers. Waste is a terrible thing, because not only does it cost you time, but it costs the customer time too. By removing a customer service interaction that didn't help anyone, you're actually doing your customer a favor!
Let's see an example
At Less Annoying CRM, we offer one-on-one onboarding calls to everyone who signs up for a free trial. It's incredibly expensive and difficult to scale this level of phone support, but it provides huge value to our customers, so it's worth it. If our goal was to reduce costs, we might try cutting these calls to 30-minutes, or eliminating them entirely. But that would mean providing less value to customers, and in the long run, that would hurt the business, not help.
But what if we dig a bit deeper? In aggregate, those calls provide value, but do all of the calls individually provide value? We asked the CS team to make a note anytime they had a call that they felt wasn't actually valuable for the customer. What we found is that there were a variety of reasons this might happen:
- The customer requires a feature we don't have, and we didn't realize that until the end of the call, making everything we discussed previously pointless since they won't end up using us anyway.
- The customer hasn't imported any data or watched the beginner's guide videos. The call ends up being a recitation of the beginner's guide, but it's worse because those pre-recorded videos are much more polished than a live conversation.
- The customer doesn't actually need any help, they just thought they should accept the offer for a call because we made it seem like a normal part of onboarding.
That's what waste looks like. We spent time on the phone with a customer, and they didn't get anything out of it. As a matter of fact, they wasted their time alongside us, so the call actually hurt the customer.
Reducing waste is a win-win
Because waste is costing you and your customer time and money, it's the perfect thing to target if you want your customer service to be more efficient. Once you've identified waste, anything you can do to reduce it is a win-win. The key is to make sure that you don't throw the baby out with the bathwater. In the example above, it's important to reduce time spent on the pointless calls without reducing time spent on the valuable calls.
The specifics for how to reduce waste are heavily dependent on your business, but I plan on sharing some tactics that have worked for us in a future post. For now, hopefully this framework can help you identify the right kind of efficiency gains so you can start reducing the cost of your customer service without reducing the quality.