Editorial
The Gist:
- Don’t make customer support a second thought. Companies’ willingness to cut CS budgets impedes good customer service.
- Customer support is not a cost center. Treating it as such makes your company vulnerable to repelling potential consumers.
- Invest in customer retention. Oftentimes, it’s more efficient and cost-effective to prioritize existing customers than wrangling new ones.
In the first four months of 2023, tech companies laid off over 185,000 employees. Although the data doesn't specify which departments got the ax, my experience in B2B software tells me they're gutting customer support.
Traditionally, software companies view support as a necessary expense — a cost center they must bear to correct mistakes. But when reducing overall costs, executives believe customer support just gets a trim — a little off the top — and as a result, won't suffer any serious consequences. To them, it’s nothing sales can't smooth over with a steak dinner and a $300 bottle of wine.
But the reality is companies already keep support costs as low as possible. Customer service teams are sometimes located offsite — or in the basement of their building — using taped-together headsets and hand-me-down laptops. Once, I visited a contact center housed in a converted distribution warehouse, which was far from luxurious headquarters. Agents' cubicles were backed up against rusty garage doors where freight trucks once unloaded pallets of bleach, booze and breakfast cereal.
Although this is a problem, it's easy to rationalize cutting deep in support. After all, cuts in other departments have direct and visible consequences. Developers must deliver on the product roadmap for the company to stay competitive, professional services must complete projects to onboard customers and recognize revenue and salespeople must travel the country to maintain their Executive Platinum frequent-flier status.
(Just kidding. Sales is a hard job — and without sales, there are no customers!)
Related Article: AI Enhances Customer Support, but Watch out for These Common Pitfalls
Don’t Treat Customer Support Like a Cost Center
I appreciate the difficult decisions executives make when economic conditions change or the company is underperforming. I've made them as well, and I've seen the consequences play out over the next 12–18 months. When we treat customer support as a cost center rather than an investment in customer retention, we set in motion a long chain of consequences that ends in customer churn and lost revenue.
Research from Matthew Dixon, Nick Toman and Rick DeLisi — published in the 2013 book "The Effortless Experience" — found that "any customer service interaction is four times more likely to drive disloyalty rather than to drive loyalty." The role of support, the authors conclude, isn't to increase customer loyalty, but rather to mitigate disloyalty.
Because of negative word-of-mouth, disappointing experiences with customer support spread throughout the customer ecosystem. Customers tell their coworkers, who then tell their boss. Phrases like "too much back and forth" or "lack of communication" begin to characterize your company's service reputation, eroding trust and confidence.
During a "Voice of the Customer" research interview, one customer told me, "We only submit support tickets a few at a time. We don't think [company] can handle our full volume of requests at once. It would overwhelm them. So, we feed them a little at a time, and when they finish those, we feed them a little more."
Ouch. Until we conducted this research, the company had no idea customers behaved this way.
Related Article: Getting Full Benefits of AI-Human Collaboration in Customer Service
Customer Support Is a Micro-transaction
In B2B software, we typically find the onboarding project has a substantial impact on the customer experience because it sets the tone for the rest of the relationship. But after the onboarding process, the greatest number of interactions with the customer happen in support.
This is pertinent as each support interaction is a micro-transaction on your loyalty balance, chipping away at the customer's likelihood to renew, recommend or purchase again from your company.
In my work with B2B SaaS companies, I've found that "dissatisfaction with service and support" is a major driver of customer churn. Even customers who are successful with the product get so frustrated with support that they cancel, oftentimes because they’re tempted by a competitor's promise of an easier interaction.
Turnaround stories make for great case studies, but how much lost revenue do you want to tolerate 12 months from now? Don't wait until the customer success managers are chasing a renewal to examine the impact of your support experience on top line revenue. Investing in the retention of your existing customers is cheaper than acquiring new ones.
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And if your sales team needs to rack up some extra airline miles, send them out to the rusty support warehouse to observe how you're serving the customers they worked so hard to acquire. Then ask their opinion about investing in customer support.
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