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.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s