How much does customer support cost? Here's the complete breakdown and ROI.

How much does customer support cost? Here's the complete breakdown and ROI.

TL: DR

  • Customer support can often be seen as a necessary evil — it's a cost center that doesn't generate revenue but is required to keep customers happy.
  • In reality, however, customer support can be a powerful growth driver.
  • Customer support teams are often the first and only interaction a customer has with your company — this makes them uniquely positioned to improve customer satisfaction and conversions.
  • By using metrics such as cost per support ticket, cost of support per order, and cost per revenue, as well as calculating the ROI from upsells/cross-sells, retention, expansion, and indirect returns, you can show how customer support is a vital part of your company's growth strategy. 

While customer support has historically been seen as a cost center rather than a growth driver by most companies, this view is increasingly outdated. In today's marketplace, customers have more choices than ever before, making it essential for companies to prioritize customer support to stay competitive.

In fact, 90% of Americans use customer service experiences to decide whether or not to do business with a company. 

So, how much does customer support cost? Calculating the true cost of customer support can take time and effort.

In this article, we will break down the various costs associated with customer support and explain how you can calculate the ROI of your customer support operation.

By taking the time to understand the actual cost of customer support, you can see exactly how your operation is driving growth rather than simply being a drain on resources.

Why customer support is an untapped growth engine

While it has long been seen as a necessary evil, customer support is actually a key growth driver for businesses. More and more companies are starting to recognize its potential because it's often the first and last touchpoint your customers will have with your company. If this experience is negative, it will reflect poorly on your brand and discourage customers from doing business with you in the future. On the other hand, if this experience is positive, it will create loyalty and customer advocacy, which are essential for long-term growth.

On top of that, the team closest to your customers may provide invaluable insights into product usage, issues, and customer experiences, which is critical for product development.

Too often, customer support is seen as a separate entity from the rest of the company when in reality, they are intimately familiar with how your customers interact with your product or service.

But while all of that is true, it is also essential to understand the costs associated with your support team to be able to know if you are underinvesting or over-investing (usually, the first one is more common, but not always!).

You must allocate your resources wisely, which starts with understanding how much customer support actually costs.

How to calculate the cost of customer support

Now that you understand the importance of customer support, let's dive into how you can calculate the cost of your operation. While we've already gone into greater detail about the calculations themselves in this article, we'll cover the basics of each metric.

Cost per support ticket

The cost per support ticket is the most basic metric for measuring the cost of customer support. This number will give you a good starting point for understanding how much each support interaction costs you.

Cost of support per order

The cost of support per order is a metric that is particularly important for eCommerce businesses. This number will help you understand how much it costs to provide customer support for each order that is placed on your site. In addition, this ensures that you consider the cost of support for returns, refunds, and other issues that may arise.

Cost per revenue

Lastly, the cost per revenue determines how much of your revenue is being spent on customer support. This metric is helpful in understanding how much you are spending on customer support as a percentage of your total revenue. If the number is too high, it may indicate that there is an inefficiency in your process.

Remember to read this if you need help calculating these metrics.

How to calculate the ROI of customer support

Now that we've detailed how to calculate customer support costs, let's talk about some ways to estimate the ROI of customer support. 

Upsells and cross-sells

One of the best ways to determine if you are getting any sort of ROI from your customer support team is to calculate how much more money you are making as a result of it. To do this, you'll need to figure out how many of your sales come from upsells. However, without building a backend for your data to track the right metrics, it's difficult to measure.

Once you figure out the upsells and cross-sells that resulted from a customer support interaction, use this formula to calculate the ROI: 

The resulting number will show customer support costs as percent revenue. You can then use

this to compare the ROI of customer support against other investments you've made in your business.

Retention

Another great way to determine ROI on customer support is to estimate how much your customer support team helped with customer retention. Since retention is critical for long-term growth, it's important to have a metric that captures how much your customer support team contributes. 

The best way to figure this out is to estimate how many people chose to continue their subscription after a customer support interaction and assume those people who have churned if they had not had a successful interaction with your customer support team. 

You can then plug those numbers into the formula above and calculate your ROI in terms of retention. Your CES and CSAT are also handy metrics to keep an eye on when estimating this kind of ROI because, typically, the higher each of those CX scores is, the less likely your customers are to churn. 

Expansion

Your customer support team can also influence NPS scores and drive new customers to your company — just like your marketing team can with traditional customer acquisition!

In fact, they may be even better at it since 92% of consumers around the world said they trust word-of-mouth, or recommendations from others in their network, above all other forms of advertising.

By making sure that every customer has an excellent experience with your company, your customer support team can play a big role in turning them into brand evangelists to go out and spread the word. By taking the time to figure out how much new revenue this is driving by including a question about where a new user heard about your company in your sign-up form, you can use the ROI equation above to calculate ROI in terms of revenue expansion. 

Indirect returns

While the metrics mentioned above are all great ways to determine ROI on customer support, there are some benefits of customer service that are hardest to quantify, such as how it can help you develop a better product. 

You see, when you provide excellent customer service, you are constantly getting feedback from your customers on what they like and don't like about your product. This feedback is essential for product development because it allows you to make changes that will improve the experience for all of your users. A few questions you may consider asking to measure these indirect returns may include:

  • How many bugs have been reported by customers? 
  • How many features have been implemented after being suggested by customers?
  • How many sales leads that have come in via support interactions have been converted? 

While these numbers are harder to track, they are still important to consider when trying to calculate ROI on customer support. 

Conclusion

Customer support is a critical part of any business, yet it's often tough to justify the expense. However, by thinking about customer support as an investment rather than a cost center, you can start to see how it can drive real growth for your business. And by using some of the methods outlined above, you can begin to quantify the ROI of customer support and make a case for investing in it.

Remember, though, that customer support is not a one-time investment. To truly see the ROI, you need to commit to continual improvement and make sure that your customer support team has the resources and technology they need to be successful. But if you do that, you'll be well on your way to growing your business in a sustainable way that puts the customer first and helps to retain, upsell and expand your customer base.

Author

Shifa Rahaman

Content Marketing Manager

Contributor

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