3 Signs Your Startup Needs a Dedicated Customer Support Function
June 15, 2017
For a young company, the focus is typically on raising capital and acquiring customers. And for a while, that is absolutely the path to follow. However, as your company transitions to high-growth mode, you will need to develop the capability to effectively support your existing customers.
Why? Well, intuitively, the idea of happy customers certainly sounds like a good one. But beyond the warm fuzzies, there’s plenty of hard data backing up the need to keep your customers satisfied through effective customer support.
Consider these points:
Acquiring customers is expensive, particularly versus retaining them.
In fact, studies show that acquiring a customer costs 5 to 10x more than retaining one. Some studies place that multiple even higher – as high as 25% – in part because of differences in industries and business types.
The most effective way to retain customers is to provide great customer support: an Accenture study shows that 66% of customers switch companies due to poor service. Put another way: Strong customer support can effectively slow your burn rate. This, of course, presumes you’ve got a solid offering in the market – great customer support matters, but it can’t overcome a product that doesn’t deliver as needed or promised.
Poor customer support can kill your company’s reputation.
Because bad news can spread very quickly indeed.
A 2011 American Express survey found that, on average, a dissatisfied customer will tell 16 people about their experience. By 2015, with social media usage continuing to grow, Zendesk found that 58% of consumers are more likely to tell others about their customer service experiences than they were even 5 years ago. These days, an unsatisfied customer can say a lot, to a lot of people, in just 140 characters. This customer (see photo below), unhappy about his father’s lost luggage, actually paid to promote his tweet, which was viewed by over 76,000 people. Once the incident was discovered by the media, that number grew exponentially!
Customer support interactions give your company invaluable information.
Information gained through customer support interactions gives you direct insight into your customers’ experiences with your product or service.
According to John Russell, President of Harley-Davidson, “The more you engage with customers, the clearer things become and the easier it is to determine what you should be doing.” In fact, a Deloitte survey showed that 55% of respondents view customer contacts as the best way to gain customer feedback. A structured customer support function enables you to collect quantitative and qualitative data; data analysis will then allow you to identify common issues and market opportunities.
And as an added bonus, fixing a customer’s problem (service recovery) can turn an unhappy customer into a lifetime fan.
Multiple academic studies demonstrate that a customer with a resolved problem is often more loyal than a customer who’s never required customer service. 70% of customers with resolved issues will do additional business with your company (Lee Resources).
Now that we’ve established why effective customer support should matter to your company, it’s time to answer the next question:
When should your company build a customer support function?
Here are three signs the time is right:
1. The volume of customer support requests is diverting existing resources from their key responsibilities (sales, development, etc.).
Most startups initially handle customer support in one of two ways: a) having everyone receive support requests and hoping someone handles them or b) designating one poor soul to handle all of them in addition to his or her regular responsibilities.
While your support request volume may be low enough initially to be able to manage with these approaches, your company will hit the point where you need your resources performing their “actual” jobs – the ones they’re most qualified to do and that support your strategic priorities.
Approach “a” leaves you at high risk for ignoring requests or duplicating effort, putting your company at risk of alienating or losing customers. Approach “b” means one of your employees (and an early-stage startup doesn’t usually have many of those) is going to have less and less time to actually get his or her work done.
2. You are fielding certain types of customer requests/questions repeatedly.
As your company grows, you’ll likely receive certain high-frequency questions from your users. Having a formal customer support function in place allows you to recognize that fact, develop standard responses, and (if you wish) provide a self-service option and/or community option.
The Pareto Principle typically applies here: 80% of help requests relate to the same 20% of topics; being able to standardize responses is a win for your company and your customers. Standardized responses also enable your company to deliver timely, high-quality, consistent responses that reflect best practices and the acquired knowledge and experience of your company.
According to Zendesk, 91% of customers say they would use a knowledge base if it met their needs. Having a customer support function will allow your company to provide information through multiple channels, meaning your customers can select the channel most appropriate for them for any given help request.
3. Lack of data on customer interactions is hampering your ability to set strategy or allocate resources.
Your company certainly has a product roadmap to guide your product development efforts. But that roadmap can’t (shouldn’t) exist in a vacuum; rather it should be part of your company’s larger strategic plan. And that strategic plan should be guided by a number of factors, including market forces, financial resources, competitors and the voice of your customers. Users are your best source of information about how your product is perceived – its benefits, its flaws and the things users wish it would do. Unfortunately, the more your company grows, the harder it can be to keep your finger on the pulse of your customers.
A customer support function allows your company to capture the customer perspective through both qualitative and quantitative data. Quantitative data can highlight typically-occurring issues, which can point your company to bugs, design flaws, or training/documentation issues.
Qualitative data (typically free-form comments and questions) typically require more human intervention to interpret, but can provide invaluable information on product enhancements and extensions that your customers are interested in. Omitting customer feedback from your company’s strategic planning may lead your company to misallocate resources by, for example, moving product development efforts in the wrong direction or under-funding areas such as sales or customer success.
If this article has you thinking that it’s time for your company to develop customer support expertise, start by taking a deep breath! While the thought of having to design and deploy customer support staff, processes and technology can seem daunting, it doesn’t have to be time-consuming or expensive. In fact, there are some great customer support applications that can be had for little or no cost, and there are customer support professionals who can help get your company’s function up and running.