Customer service: An often overlooked but essential element for your software business

During a recent in-depth review with a portfolio company, customer service featured in a big way. The debate was three-fold:

Why set goals?

What goals to set?

Which metrics to track goals?

One of the points we discussed was ‘why set goals in the first place?’. “Shouldn’t we start and then as we get more tickets, we will understand what to track?” asked the founder. Fair argument. However, in the absence of a process, it is easy to lose track of what we were out to capture and track.

WHY SET GOALS?

Focus & direction

The team knows what they’re supposed to do, what authority & independence do they have, at what point are they supposed to engage their Team Lead. The more autonomous decisions, the less time consumed (or wasted) for the customer.

Performance management

Predetermined goals help organize the efforts on feedback, and over time provide a benchmark for team members to measure themselves against

Alignment

If everyone knows what the goal is, their actions can be directed towards solving towards the goal and not just ‘doing their own job’. This inculcates a culture of entrepreneurship within the team

WHAT GOALS TO SET?

Customer happiness

Customer service is to ensure customers are happy. Happy customers use more of your product, may refer it to their network, and may become advocates. Salesforce found that 91% customers are more likely to make repeat purchase after a positive experience.

Reduction in waiting time

Speed is the key of success. Nobody likes waiting. Especially businesses that maybe using your service for an essential need. Your first response to a customer query has to be quick, urgent, and with the right tools. If customers reach out via phone, you can measure the amount of time they were on hold. If customers reach out via email, measure the first response time (FRT).

FRT is the measurement of the average time it takes for customer support agents to respond to the company’s customer issues. It can be seconds, minutes, hours or even multiple business days. What are some industry best practices?

Reduction in cost per contact

Most companies have a limited budget for customer service. This means adding more seats to solve tickets is not ideal. Keeping costs low is key because if it costs more to service customers than they pay you for the service, your business will eventually fail.

Companies should measure CPC (Cost per contact) which is the total cost of all support services (manpower, tools, telephony, and other costs) divided by total support requests. One can go granular by doing this per channel (email, social media, phone, live chat etc).

Reduction can be done by analysing channels and the quality of questions. If you are solving simple or mundane requests like location of a particular button or time to expiry, you can move these to a chatbot where users can self-serve, and contact a customer support team member in case the options are not available for self-serve.

WHICH METRICS TO TRACK GOALS?

Number of tickets per X

This X can be:

New customers

Per 100 customers

Per channel (phone, email etc)

… (anything else you can think of)

Identify the common denominator and solve for it. This may lead to the Number of tickets per X going down.

What to track within?

Development bugs, user experience issues, product features or use cases etc

How to improve?

Quality testing, better onboarding, pre recorded product demo videos to highlight specific features or use cases will lead to lower number of tickets raised for these issues

Customer satisfaction of issue resolution

Customers satisfaction becomes better as tickets per X reduce. However, tickets per X can also reduce if the product is difficult to use and customers give up, or you make it so difficult for customers to reach you so the customers give up. Take it with a pinch of salt. How to measure? Read more here. There is no one size fits approach to this.

Profit margin of customer service

More channels mean more costs. Early-stage companies usually have 1 or 2 channels due to the costs involved. Here, it is important to keep tracking CPC and reduce for both numerator (costs), and denominator (contacts or tickets raised). As you optimize, you will find happier customers and eventually a better service margin

These are high level metrics we could brainstorm over a short period of time. They are easy to identify and calculate, and most good products have a way to find these costs. If you have not yet started post service resolution customer survey or feedback, you should consider starting now.

Most customer service departments will have in depth metrics that they track, but eventually the ones above will account for most high-level ones.

At the end of the day if you want to really understand your company, products, customers, and their problems, becoming a customer service agent for a day is the best way to gain perspective.