Customer Service as Ancillary Revenue


TICSS Customer Service Measurement Model

Image via Wikipedia

I’m suggesting a shift from thinking of customer service as a revenue source — which by definition makes it a form of Ancillary Revenue — rather than a sunk cost.

Don’t you already feel a little bit better about customer service having framed it as a revenue source?? Let’s start with an example.

When I call an online travel agency and they go out of their way to fix a problem, that creates goodwill, which has a value.

The revenue from my next 5 purchases directly related to your customer service efforts is additional revenue.

The cost of acquiring me as a customer is now amortized over multiple transactions and not just one purchase (the one with the problem which never got fixed which led me to never buy from you again).

The revenue generated from telling my friends generates additional revenue (at a low or no incremental cost). How many seconds does it take me to Tweet or worse yet FB post my experience (which you’ll never get to see and therefore can’t fix nor will it show up on any agency report).

Increase in market cap and differentiation. A little bit of customer service goes such a long way; travelers are yearning for the littlest morsel of help. Somebody at that massive online travel agency cares — there’s actually a human on the other side of this phone call.

Take the First Step.

Start with a clear intention of tracking the costs and revenue for a given set of customer(s). Intention is everything!

Start with one product and one set of customers and go from there. .

Use accurate ‘averages’ if you can’t get specific numbers. Limit your pilot to high margin products if that makes it easier internally champion.

Work with your colleagues in marketing, sales and finance.

Track the values on an Excel file if need be.

Apply it to historical data if you have all the data sets.


Why Isn’t This Done

First, Short Term Thinking. As executives and managers, we’re knee deep in the here and now that we don’t have time to think longer term.

Second, It’s not easy. The gravity and scope of what I’m advocating hasn’t escaped me. It’s a nightmare even tracking the costs and assigning a value to them. You don’t have to tell me, I’ve done this, I know.

Third, and I’m no accountant,  but my agency operations background tells me there is no universal report that shows the numbers side by side. Nothing that shows the actual costs for the customer service (say $5.00 in agent salary, $0.25 in phone call..) alongside the newly generated (or projected) revenue coming from the incremental revenue,  goodwill and lower customer amortization costs.

It’ll be worth it in the end.

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This entry was posted in Travel Trade and tagged , , , , , , , by Abrar. Bookmark the permalink.

About Abrar

Welcome to the narration of whatever is piquing my interest. I spent the first 6 years of my professional life in software development and project management at a start-up, a 10 person consulting company and ultimately reporting to the C.I.O. for a Fortune 150 conglomerate. I've spent the last 9 years in travel the travel industry: 2 years in managing travel technology projects (the systems travelers use like booking engines and fare databases) and the remaining 7 years in business development at an online travel agency specializing in international travel. I truly enjoyed growing from 2 people and near zero sales to a multi-national travel agency with an offshore call center, deploying an overseas sales office, securing key corporate clients, implementing strategic relationships within the travel industry and embracing technology as best we could afford to do. I stepped away from a day to day role in 2006 and have since specialized in advising companies in and outside of the travel industry on what to do and what not to do as they expand. My personal interests include international travel, reading books and spending time with family and friends. I love business, I love travel and I love technology.

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