Lower customer contact costs

The Number two Goal of Freshworks Implementations: Lower costs of customer contact

Lessons Learned From Over 100 Implementations

At Xebia, we have done over 100 Freshdesk, Freshchat and Freshservice implementations since 2014. All these implementations have had their own reasons for companies, but in the end we have seen that four of these reasons came back almost every time.

1. More grip on the operations 
2. Lower costs of customer contact
3. Improved customer experience
4. Improved employee experience

In the second part of this blog series, we will talk about ‘lowering the costs of customer contact’ in more detail.

Competitive advantage

Lowering your costs would not always lead to the desired result. It’s better to focus on optimizing your way of customer contact. In a way, you can compare this to a triathlon that Koen does. It’s of crucial importance to focus on the quality of the performance of the process, instead of getting to the finish as soon as possible. Focussing on the process may mean that your necessary equipment meets your needs, having enough to eat and drink during the race and that you balance out your energy for the full process. In that you, will most likely succeed with a good end result!

“If you focus on cost, quality goes down, if you focus on quality, cost goes down.”

But what does this mean when it comes to the service industry? How do you steer to a specific focus point to minimize the cost of customer contact?

Service cost ratio

Let’s take an online retailer, as an example in this case. This retailer sells online products to construction companies and focuses on ‘service costs per online transaction’. We call this the ‘service costs ratio’. The calculation looks like this: service cost ratio = (amount of customer contact moments * costs per contact) / transactions. 

The amount of transactions would, hopefully, look like a rising line. We assume that if the amount of transactions increases, the revenue increases as well. In most cases, the service costs will increase as well, alongside the increasing amount of transactions. More questions will come in on topics such as returning info, payment possibilities and shipment. When we succeed to lower the number of questions or decrease the costs per question, the costs of service will increase less fast, than the revenue. This means that the profitability of our online retailer will increase. We make the organization more scalable because costs increase more slowly than turnover.

Focussing on the right focus

Gaining a competitive advantage is definitely possible if you focus on customer contact costs. Focusing on lowering your cost will not always lead to the desired outcome, but caring out your way of customer contact will: if you focus on costs, quality goes down. If you focus on quality, the cost goes down. Using the ‘service cost ratio’ as a tool helps to lower the cost of customer contact. Make sure to keep an eye on our next blogs for more tips.