It’s a weird thing to say. Typically, an organization’s Customer Service department is anything but a profit center. At times, possibly to a fault, I try to find an ROI in every situation. Sometimes it’s an easy equation to calculate. Sometimes it’s very difficult when you are dealing with variables that are not easy to quantify.
Back to the topic. Last year, I challenged our head of Customer Experience, Luke Bagley with the following…
Make the CS department a profit center.
We took the obvious costs of staffing and our platform (Gorgias), but then also agreed that his team was responsible for 10% of any refunds/replacements of our product. The thought process here is that Luke’s team will sometimes side with a customer prematurely to get a resolution (human nature) which in turn means our refunds/replacements are 10% higher than they would be if there was a strict runbook in place and he did not have the autonomy to make these decisions. We are still working on if that number should in fact be 10% or higher (or possibly lower).
Next up was a very long process of coming up with ways his team could drive revenue. As his team is having hundreds of daily interactions with customers, community and connections are formed. Each team member has a unique coupon code that they can give out for further purchases if they deem appropriate. This was our first attempt and it was NOT a needle mover at all. Ultimately the goal is to drive additional revenue, but for our calculation of profit, we also have to back out the COGS (cost of goods sold).
We have tried several different approaches and have found 2 that seem to be needle movers for us so far. This made our CS department a profit center for the first time in January. February was profitable as well and we can now assume that given our current playbook, CS will be a profit center moving forward. Of course, we will keep testing additional approaches/campaigns and hope to have a 3rd to add to the mix sooner than later.
I am going to outline the 2 approaches/campaigns that are working well for us currently.
1 - Upsell campaign - Luke’s team already reaches out to new customers to welcome them to the community. This actually comes from the CS team and is not part of our normal welcome onboarding automation series. There are no graphics, this is a real email from the team simply providing our users with a direct point of contact should they need anything.
When a new BattlBox subscriber joins us, they select one of 3 past BattlBoxes as their first box. This of course means that they will not receive the current/upcoming box the first month. After the first month, they fall in line with the rest of our base and always get the next upcoming box.
This creates an opportunity. As Luke’s team is already going to reach out to greet our new customers, let’s go ahead and make sure they know that they are missing out on the upcoming BattlBox and offer to process their order for them if they want it. The results last month were pretty impressive. We reached out to 1,701 new customers and 23.05% of them replied to the email asking us to process the order. This generated $44,377.10 in revenue. This is revenue we would not have seen otherwise.
2 - Expired Revenue - We have taken churn very seriously for the last couple of years. We were definitely ahead of the curve when it came to taking it seriously, but in hindsight, it should have always been important. Back in 2015 and 2016, customer acquisition was so easy that churn was an afterthought, unfortunately.
We renew our subscribers on the 15th of each month. When a customer’s card fails on the 15th we begin our 12-day dunning process. Additional attempts on the card, automated emails from multiple members of the team, and even a text message are all done in an effort to prevent passive churn (this is done via Churn Buster). Unfortunately, even doing all of the above, we still have several hundred failed renewals on the 27th. For most subscriptions companies, the end of this process marks the end of the attempts.
On the 27th, Luke’s team receives an export of all failed subscribers and begins their outreach. Multiple personal emails (coming from our ticketing system, not our ESP) are sent to the customer over the next few days trying to get their accounts back active. Overall in January, Luke’s team was able to retain 70 customers for $8,627 in revenue. In February, they retained 57 customers for $4,694 in revenue. On average, we are retaining 20% of customers that normally would have left via passive churn from our previous efforts
Last, in addition to the above approaches/campaigns, Luke’s team also manages claims with the shipping carriers. For the first time in almost 7 years, we are actively engaging with the carriers to get money back from lost/damaged packages.