Five strategies to reduce customer service costs

Are you looking for ways to reduce your customer service costs without affecting the quality of your service? This article will show you strategies to help you reduce customer service costs while promoting the financial health of your business, increasing turnover, and maintaining customer satisfaction and loyalty!

What are the main customer service costs?

Customer service is an essential part of any business, but it can also be one of the most expensive. Now, do you know exactly your customer service costs? It’s just the total amount of money a company spends to support its customers. Therefore, the main costs are:

• Employee salaries and benefits: The cost of customer service staff is usually the most significant, as it includes salaries, benefits, and training.
• Technology and infrastructure: Investments in different platforms for team management and customer contact;
• Training and development: Ongoing costs to train agents and ensure they are always up-to-date in terms of best practices and new technologies.
• Physical resources: Office space, equipment, and other physical items required for customer service operation.
• Operating expenses: Miscellaneous costs such as communications, office supplies, and other general operating costs.

How can you calculate customer service costs?

To calculate customer service costs, you must identify and add up all expenses associated with the department. See the steps below:

• Define a period

If you don’t know how to reduce customer service costs or where to start, first determine the period you want to evaluate, which can be a month, a quarter or a year. It will help you organize your data and visualize customer service trends over time.

• Identify all direct costs

Include salaries, benefits, training, and specific technologies for customer service.

• Add indirect costs

Include expenses related to infrastructure, rent, equipment, and other operating costs required for customer service operations.

• Calculate the average handle time for every agent

Use a software tool to track the time each agent spends on each interaction. Then add up to find the total time spent with all interactions and divide by the number of interactions in the period analyzed. It will give you the average handle time (AHT) for each agent.

• Calculate the cost per interaction (CPI)

To accurately calculate the CPI, all customer service costs should be considered (sum of direct and indirect costs), not just the salaries of agents.

CPI = total customer service cost / total number of interactions.

A low CPI indicates that your customer service operation is efficient! On the other hand, a high CPI probably indicates problems such as:

• Overstaffing;
• Lack of training;
• Inefficient processes; and
• Inadequate technology.

Reducing customer service costs

And now, how can you avoid high customer service costs? See our suggestions below:

1. Adopt standardized processes

Standardized processes help you organize workflows and identify areas for improvement. For example, procedure manuals and flowcharts can be used to guide the team in different situations, ensuring consistency and efficiency.

2. Use technology as your ally

Automating processes with the help of technology can significantly reduce your customer service costs. The idea is to use self-service solutions, chatbots, FAQs, and artificial intelligence to solve common problems. This way, you can provide efficient customer service without having to increase your staff.

3. Centralize all work in one place

Using a single platform to manage all customer interactions can help you save money and, best of all, improve business organization and efficiency. After all, this tool eliminates the need for multiple tools, simplifies information management, and supports team collaboration.

4. Monitor customer service indicators

Monitoring key performance indicators (KPIs) helps you measure the productivity and efficiency of customer service. Metrics like response time, first contact resolution, and customer satisfaction should be tracked.

5. Invest in loyalty programs

Estimates indicate that retaining customers is five times cheaper than acquiring new ones. For this reason, you should invest in loyalty programs and retention strategies, provide excellent customer service, and create personalized experiences to keep your customers happy and loyal.

Read more: WhatsApp service system – your ally to improve customer experience

Implementing a cost reduction plan

Now that you know how to reduce customer service costs, it’s time to develop an effective plan that includes: 

1. Initial analysis: evaluate current costs and identify high-cost areas;
2. Set goals: set clear and measurable goals to reduce costs;
3. Develop strategies: structure the strategies that can help reduce costs, such as the adoption of standardized processes and technology for customer service;
4. Deployment: put the planned changes into practice, ensuring that all team members are aware and trained;
5. Monitor and adjust: track the results and make adjustments as necessary, ensuring that goals have been met.

Put all these tips into practice with a single solution

Implementing these strategies can be challenging, but the right tool will make it easier. So if you want to save money in your customer service operation and don’t know where to start, we have the best solution!

Milvus is a comprehensive and integrated software tool that offers important functionalities to organize your customer service. We can help you reduce costs, increase efficiency, and improve customer satisfaction. 

To learn more about our platform and its features for your customer service system, contact us now for a free trial.