A lot of startups that are growing really fast often struggle to allocate their support resources according to customer size and technical complexity of support cases.
That's where the 80/20 rule should be implemented.
It’s an exciting time for SaaS companies.
Last year, the market topped $145.5 billion, and some analysts predict double-digit growth through the end of 2022.
Why, then, do 92% of SaaS startups fail within three years, regardless of funding?
Two words: customer churn. While it’s not the downfall of every shuttered startup, customer attrition has played a role in more than one implosion.
Bottom line: if you’ve got more churn than growth, you’re in trouble.
It’s awfully hard to grow when you’re consistently losing customers.
The good news? High-quality customer support - the kind that connects your customers to humans, not bots -can go a long way towards improving your retention rates.
But how to allocate your technical support team’s resources and proactively identify potentially challenging customers so you can plan accordingly?
This is where the 80/20 Rule can help you think through your technical support needs to support a long-term growth strategy.
What is the 80/20 Rule?
The 80/20 rule (aka the Pareto Principle) posits that 80% of problems arise from 20% of causes. Think of a class comprising 50 students. Over the course of the semester, the professor logs a total of 100 disruptions.
If we apply the 80/20 rule, we would expect that 10 students would account for a full 80 of those disruptions.
While obviously not applicable to every scenario, it serves as a useful reminder that inputs and outputs aren’t always equal.
How Does This Apply to Customer Support?
It may come as a surprise to you that 80% of resources in customer support tend to be spent on just 20% of cases.
Generally, the cases that take up the most time and resources fall into level 3 cases, and they tend to be of a technical nature, which requires technical support agents and developers to solve.
Knowing this should simplify your customer support operations strategy.
When allocating resources and personnel, you’re going to prioritize the heavy-hitting 20% to ensure the customer's that raise issues that fall into this category receive the best support experience possible.
Focus on Customer Retention Rate
Focusing on retention is the more effective strategy to safeguard the health of your business and continue to scale.
According to one study, just a 5% increase in customer retention had the potential to boost profits by 95%.
Rather than zero in on only a few key customers, smart SaaS companies develop sophisticated retention strategies designed to keep all their customers satisfied.
The key to any retention strategy for a SaaS? Top-of-the-line technical support.
A full 67% of customers cite poor customer support as the reason for switching businesses or canceling a subscription, and only 13% will recommend a company - even an essential one - if they perceive the customer support as “very poor”.
Improving Technical Support to Boost Customer Retention
But how to ensure that your team provides the prompt, responsive, personalized service that makes for excellent technical support?
Particularly if you're working with a lean team with just a few support representatives, using the 80/20 rule as a guideline for resource allocation can help you structure your operations to make the best use of your support representatives.
Implement Proactive Customer Support Strategies
In this case, you’re working from the principle that 20% of your support cases will occupy 80% of your team’s time.
Whether because a few particular clients require some additional TLC to get up to speed, or due to a specific issue in your product that requires some tinkering from developers, the 80/20 rule indicates that there are areas of customer support where cases are not being addressed efficiently.
Understanding where your customers encounter friction in their experience of your product not only allows you to think proactively about how to improve the support they receive, it also ensures you have the right people and tools n the right place, at the right time to solve problems and deliver better support experiences.
The 80/20 Rule and Level 3 Support
Let’s say, for example, that a customer submits a ticket indicating that a key product feature isn't functioning properly, despite having worked just fine during implementation and rollout testing.
Your first-line customer support agent receives the ticket and reviews the replay of the customer attempting to access the feature before responding with a series of scripted suggestions targeted to this category of issue.
These basic troubleshooting pointers fail to do the trick, however, and your support specialist escalates the ticket to include input from someone with more advanced technical know-how.
To diagnose the customer’s problem, your Level 1 support agent will typically do calls to gather basic information. If the problem is more technical, they will escalate to level 2 and 3 support, who will ask for information such as which operating system was used, which browser, console logs, etc. etc.
If the problem persists, they may seek out input from a developer or support engineer who is able to perform a root cause analysis.
Again, it’s inevitable that Level 3 challenges will crop up from time to time. Designing a technical support strategy that allocates resources and clearly defines the progression and escalation of an issue, however, means that when they do, you’ll be prepared.
Rather than scrambling to “borrow” people or using non-specialized software to deal with complex technical cases, you’ll be better prepared when such cases arise.
Over time, the 80/20 rule may lead you to invest more resources in your customer support department to empower them to deliver better customer support.
Likewise, a technical support platform with features such as user season recordings, live user feeds and co-browsing can free valuable time for your support agents to troubleshoot more complex issues.
The top 20% of your support cases take up 80% of your resources and time.
This is the case, because support cases that are escalated to level 3, tend to involve multiple stakeholders, both from the customer side as well as the vendors side.
Let's imagine a level 3 customer support case:
A customer just reported a bug in your system. This usually means that the support agent, the customer, and a developer, now have to get involved in a support case with multiple stakeholders.
This can easily take up an entire afternoon, and it basically means that there are multiple stakeholders having to gather information from different people in different companies, with different tools.
They're all trying to create a bug report with more information, for a developer to then go and recreate, and diagnose to fix the bug.
This can become quite a messy process. As a support leader, it's therefore important to keep the 80/20 rule in mind, and allocate resources accordingly.
Having the right tools for your customer support agents enables them to be able to handle these cases swiftly and without taking up too much time and resources.
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