A Stepwise Customer Service Transformation

From Cost Center to Revenue Center to Profit Center

Highlights

  • A customer service transformation shifts the organization from an expense that eats into profits to a contributor of profits. This occurs in a sequenced transition from cost center to revenue center to profit center.
  • Profit centers recognize the untapped value of the customer base, apply fee-based services to capitalize on that laden opportunity and reposition value in revenue terms. They append their mission from just delivering good customer support to delivering increased customer value that grows the existing customer base and drives revenue growth.
  • Goals for customer satisfaction and customer profitability are not mutually exclusive. In fact, they are symbiotic. Research shows as customers procure more products and services, they become more loyal.
Johnny Grow Revenue Growth Consulting

Companies do all they can to grow revenue and lower expenses. So, if the contact or call center only consumes company money that would otherwise go straight to the bottom line it finds itself in a precarious position.

And service leaders find themselves having to negotiate every dollar of budget and investment against other people in the company who negotiate for improved revenues and profits. It's a tough argument.

But when the contact or call center evolves from a cost center to a profit center the discussion also evolves. Budget discussions change from cost cutting that lowers expenses to investments that drive revenues.

If your support organization is still a cost center it may be the right time to plan the journey to become a profit center.

But that journey is seldom achieved in a single step.

From our experience in customer service transformations, we've found that the business model intentionally shifts from a cost center to revenue center to profit center.

Customer Service Cost Center to Profit Center Evolution
1

Cost Center

Cost centers focus on agent productivity and customer satisfaction.

The top goal is to satisfy customers at the least cost.

So, agent performance is measured with efficiency metrics such as Average Handle Time (AHT), Speed of Answer (SoA), First Contact Resolution (FCR) and Customer Effort Score (CES). Customer satisfaction is measured with metrics such as CSAT and Net Promoter Score (NPS).

More advanced cost centers will also measure the agent experience as they know it's prerequisite to delivering superior customer experiences. And they will measure the customer experience with metrics such as customer lifetime value (CLV) and retention.

But even when they operate well, they know there is limited ability to continuously cut costs and satisfy increasingly demanding customers. Most see the writing on the wall. They know they need to contribute revenues to end the cycle of continuous cost cutting and raise their stature in the company.

But to get to the next level, they need to assess operational readiness, develop a plan that generates revenues and get executive sponsorship.

They must also satisfy the prerequisites. That may mean fixing broken processes or improving customer outcomes. Any process inefficiencies or excess costs will exacerbate when those processes are scaled.

Prerequisite processes include a positive agent experience, high customer satisfaction scores, sufficient agent productivity, streamlined processes, an automated case management system and a closed loop reporting system.

Assuring an efficient cost model and repeatable outcomes before advancing to a revenue model will reduce friction and accelerate results.

2

Revenue Expansion

To advance from a cost center to a revenue center you have monetize customer support services.

That's a shift from delivering customer support to delivering customer value.

The biggest step up in this phase is the introduction of customer service revenues streams.

That may include enhanced or premier support services, sales order processing or sale opportunity capture and routing to the salesforce.

New sources of revenue will achieve the highest acceptance and growth rates when defined by a customer service growth strategy built on customer segments, channels and journeys.

Customer Service Growth Strategy

The above illustration is a simple model with two channel categories and two customer segments. Defining additional channels and segments will further increase account fit and personalization. It will also induce fee-based differentiation, margin expansion and incremental revenue growth.

The mission changes when adding revenue goals. Instead of just managing cases for resolution the contact or call center now manages the customer relationship. But that's a shared responsibility so the contact center must also integrate with marketing, sales, R&D and other customer facing functions that do the same.

This horizontal integration is built on technology that delivers a single, shared view of the customer. It also manages enterprise-wide customer processes and facilitates cross departmental collaboration to solve for the customer. The underlying technology will be CRM software but other applications may also be needed.

When missions and processes change so do the performance measurements. Metrics will continue to include agent and customer satisfaction measures but will expand to also include revenue performance measures such as daily agent sales conversions, Revenue Per Representative per day (RPR) or sale opportunities forwarded to the salesforce.

3

Sustained Profitability

To become a profit center the organization focuses on the two-fold goals of scaling revenue streams and lowering expenses.

Growing revenues is all about account growth, and that's all about growing the customer relationship. With every customer interaction, whether resolving a problem or selling a service or product, the agent is growing customer share. And we know from customer service research that increasing customer share increases customer loyalty. It's a virtuous cycle.

Lowering contact or call center cost to serve is a function of process optimization and technology automation.

Because of the very high incident transaction volume, significant savings can be achieved with right channel customer support alignment. The below chart is taken from a research study and shows the cost per contact per channel.

Customer Service Channels

Customer support profit centers figure out how to move different types of customers and cases to the most efficient channel. Shifting even a small percentage of cases to more efficient channels will deliver significant and sustained cost savings.

See how customer support profit centers can move different types of customers and cases to the most efficient channel, to achieve significant and sustained cost savings.

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At this stage, the customer service transformation creates a self-fund continued evolution. That's important because even at this stage the journey continues. Today's customer support capabilities become tomorrow's table stakes. Customers continually become more informed and empowered and expect more from the company. When the contact or call center earns a profit it is in position to make investments to meet customers' growing expectations.

The Point is This

Contact centers were once limited to delivering great customer support. But the competitive environment demands increased methods for increased profits. And everyone contributes.

The support organization is in a unique front-line position to deliver great service and follow-up with value-added services and other revenue generation events that grow the customer relationship, customer loyalty and the company's top and bottom line.

And that serve's the two-fold goal of elevating importance to both the customer and the company.