• June 21, 2013
  • By Leonard Klie, Editor, CRM magazine and SmartCustomerService.com

AnswerNow Helps Companies Compute Call Center Costs

Call center solutions provider AnswerNow has added a new customer service calculator to its Web site to help organizations determine the cost of poor customer service and the overall impact to profitability.

The economic impact of bad customer service can be devastating to large and small businesses. According to an AchieveGlobal study, 50 percent of respondents said they would try out a competitor after just one bad experience with a company. Ninety-three percent of those surveyed would defect completely after three or fewer bad customer service experiences. The same study concluded that securing a new customer is seven times more expensive than retaining an existing one.

Also, the research found that 46 percent of respondents found customer service reps who were rude, short, unpleasant, unhelpful, or impatient with them were the greatest customer service mistake they've encountered, and the most irritating agent behaviors stem from detached emotional awareness and connections.

The premise of properly maintaining an existing customer base is the foundation for the customer service calculations. The AnswerNow Customer Service Calculator measures three critical costs that can drive down a business's profitability:

  • Cost of Losing Customers (which looks at the average revenue per customer multiplied by the number of customers who abandon the company each year);
  • Cost of Replacing Lost Customers (which takes the dollar value of marketing efforts to gain one customer multiplied by the number of defect); and
  • Cost of Bad Service, (taking the operating budget and multiplied by the percentage of the total operating budget spent fixing customer problems.

The customer service calculator complements the company's other calculator, the Call Center Cost Calculator. That Web tool looks at total labor costs, benefits, paid time off and holidays, bonuses, headsets, chairs, phones, computers, Internet and phone service, training, hiring, and overhead costs to come up with an annual dollar amount.

"We all know bad customer service costs companies money," said Michelle Weiss, vice president at AnswerNow, in a statement. "Until company executives and managers actually see the dollar impact, they may not understand how bad service is hurting their profits. With our calculator, companies see the amount of money they are needlessly sending right to their competition."

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