Customer Service: Beyond a cost center
We can always learn from best practices in adjacent industries...
The Software-as-a-Service (SaaS) market has boomed in recent years with the likes of Dropbox, Avalara and Plural Sight going public in 2018.
The evolution of these companies (subscription models) has brought a relatively new modus operadi to the world of business- the high emphasis on "Customer Success"
Churn, Customer Success, Feedback Loops
Due to the tight feedback loop within the SaaS ecosystem, companies can quickly react to the demands of their customers and thanks to more sophisticated modeling techniques, we also know how and what to prioritize depending on our metrics.
Here is the number one management dilemma:
Should we focus on customer acquisition to grow the top of the funnel growth? Or should the focus be on engaging with the current customer base to increase the lifetime value?
The answer: Engagement first, acquisition later.
SaaS companies have proven this to be true across verticals and customer price points. So, is this true for the retail industry?
Why? Because it is the cheapest and most sustainable way to grow your business. Without going too much into the weeds of a financial model, here is a thought experiment.
Say you had to spend $10 to acquire every new customer that would spend and average of $50, how much would it cost you to engage that customer at scale to ensure that they are happy with their purchase?
Option 1: You are doing it through email with no automation- manpower cost but essentially free
Option 2: You are doing it through email with automation- no manpower cost but cheap software
If the cost of engaging customers is so much lower...why not do it?
If it were that simple, everyone would have figured it our years ago. The problem is, WE CAN'T SCALE THIS.
BUT. The world today is fundamentally different than it was 10 years ago.
The distribution channels you have available at your disposal (email, mobile messages, in-app push notifications) were not as matured as it is today.
Analytics wasn't as sophisticated 10 years ago. This meant that we couldn't quantify the value of each customer and those who bet on customer engagement back then had to go fingers crossed hoping that everything panned out.
The main consumer market today looks very different from just a decade ago. This generation growing up came up with smart devices at their disposal and aspirational brands like Lush, Nike and Amazon reaching them across these touch points. They are used to brands engaging with them.
Scaling with Technology
We acknowledge that due to the rising number of channels (social message pages to company emails), the customer support and customer engagement has to contend with much more than their counterpart in previous generations.
Let's tackle three practical limitations with regards to scaling customer support/ success in today's age. We will not be able to keep up if...
- The number of channel touch points continue to grow
- The volume of responses/ complains continue to grow
- Customers have different behavioral traits
Answer: Unify, Automate, Observe (rinse & repeat)
Unify: There are so many software tools out there right now like Front to help you and your teams connect to the messages streaming in from different channels. Everyone should be able to see how customers are interacting with your brand across these channels on this unified platform.
Automate: This will be the main differentiator in the 21st century. Getting more done with less. With advancements in Natural Language Processing, there are numerous software companies tackling the help desk space to offer chatbot responses to solve quick issues. The common complain here is that this doesn't solve all your responses yet (duh!). So would it be worth it to you if you could automate away a measly 20-30% of questions? [Just count the number of times customers in the last month asked you where their orders are or whether item X is in stock.]
Observe: This is important to realize that automating everything away at the start and stepping away from all customer interactions is a surefire way to fail in the long term. Even after you've set up automation, a cookie-cutter approach probably isn't going to cut it. Your customers ARE different but they aren't THAT different. You could probably engage with at least 20% who behave the same way (Love you email newsletter- Loyal fans) and another 15% who form another segment (Hate spam, love discounts). Once you think you have identified these segments keep testing and keep getting better.
Bonus: Evolution of the CRM = Monetization
Here is a bonus section. Thanks to advancement in analytics technology and business design thinking, the CRM is no longer a glorified database.
When a shopper goes onto your website to ask about a discount code, your CRM can now inform you which products and brand this particular individual has purchased in the past. They understand their taste and preference and some can even offer promotional suggestions that you can then offer to the shopper at that point in time.