Reducing costs per contact

Lessons Learned From Over 100 Implementations

As we have learned in the previous three blogs of this series, from over 100 Freshworks implementations, there are four universal goals:

1. Improved operational control
2. Lower customer contact costs
3. Better customer experience
4. Enhanced employee experience

In the previous two blogs, we discussed how to achieve lower customer contact costs. It’s crucial to focus on the service cost ratio, calculated as (number of customer contacts * cost per contact) / transactions. In the previous blog, we discussed how to reduce the number of customer contacts. This blog is about reducing costs per contact.

“If you focus on cost…”

When it comes to reducing costs per contact, it’s essential to never lose sight of the fact that focusing on costs can have counterproductive effects; ‘If you focus on cost, quality goes down, if you focus on quality, cost goes down’. This is because delivering high quality can result in fewer complaints, fewer issues, and fewer necessary repairs. The emphasis in the points below is thus primarily on quality.

People, processes and technology

We believe that successful digital transformations happen when people, processes, and technology are taken into account. However, technology is often not the bottleneck in successful digital transformation. To reduce costs per contact, we place emphasis on processes. Specifically, on understanding, or even fully describing your customer contact processes.

An example of a contact process might be:

1. The customer contacts, which automatically generates a ticket;
2. The ticket is assigned to the correct group and person;
3. This person delves into the customer and the query and sends a response.

By simply documenting or visualizing these customer contact processes, you will easily identify steps in this process where costs can be saved.

Léon Co-efficiency

We measure the result of an improved process step using the ‘Léon Co-efficiency’, developed by our colleague Léon Duvivié.

Let’s start at the beginning. One of the process steps where our clients often achieve higher efficiency is the step of assigning an incoming customer contact, or ticket, to the right and responsible group. If this initial step is not done correctly, the ticket needs to be reassigned to another group later. This results in a loss of time. Someone has opened the ticket, looked into it to some extent, and carried out the step to move the ticket to another group. While this might not take much time per ticket, if this happens with many tickets, it becomes a time-consuming problem.

All these steps do not add value from the customer’s perspective. On the contrary, they lead to slower responses and higher costs for the organization, which in turn affects customer satisfaction. Within the Freshworks products (especially Freshdesk and Freshservice), you can retrieve information on how many times a ticket has been reassigned to another group. We define the “Léon Co-efficiency” as the average number of times a ticket is manually assigned to a group. The goal is to try to keep this coefficient as low as possible.

Improving the Léon Co-efficiency

Tools to improve the Léon Coefficient include:

1. Using a ticket form on the website where specific fields must be filled out. This is often used to reduce free-format emails.
2. Using automation to assign tickets to another group based on keywords in the email, the sender, the ‘to:’ address of an email, and other input.
3. Analyzing and learning from tickets manually assigned to other teams. Quickly placing these tickets in one overview can be achieved, for example, by creating an automation that adds a tag when an employee manually changes the group.

We do not apply the The Léon Co-efficiency to one specific quadrant of the customer contact matrix, but offer value in every quadrant.

First Time Right

To reduce costs per contact, you can also work on improving the ‘First Time Right’ approach. The First Time Right is about resolving the customer’s query in just one go. This does not only reduce costs but also has a significant impact on customer satisfaction.

We’ve come up with another list of tools that might be of help:

1. Within the Analytics module of Freshdesk or Freshservice, you can report on the Agent Reply Count, Customer Reply Count, and the total number of interactions. Check a more elaborate definition of these terms here. A good starting point is identifying areas where improvement is possible by investigating which category or type of tickets the agent needs to reply most to. When you have collected the topics with a low First Time Right ratio, you can look if there are significant differences in the First Time Right between groups, channels or customer groups per topic. This could help you to understand where to start first.
2. Using a ticket form on the website can improve the First Time Right, as specific fields must be filled. One of the advantages of having a ticket form compared to a free format email is that various ticket fields need to be filled out mandatory. This increases the chance that you receive all crucial information to get back with a complete response, instead of having to get back to them with more questions.
3. Another option to increase the First Time Right is using standardized responses so employees will be able to send all crucial information. 

When improving the First Time Right, we advise organizations to choose customer contact topics that have low value for the customer but high value for the organization. This aligns with the topics in the top-left quadrant of the customer contact matrix.