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4 tactics to reduce customer support cos...

4 tactics to reduce customer support costs and improve service in 2023

9 min read

Updated on 11th July 2023

Natalie Smithson
AI enthusiast | Tea addict | Focused on using AI assistants to win the working week
chatbot ai success

Customer support managers face the seemingly impossible task this year of improving service while cutting costs. You know good customer support isn’t just about keeping up with customer enquiries. It’s about nurturing strong relationships with customers, understanding their unique needs, and giving people a personalised service while you’re at it, which ultimately boosts profits. And yet, cutting back on the cost of providing customer support is a must for many customer service leaders this year with budgets being squeezed from all angles.

The good news is, you can spend less on customer support without sacrificing the quality of your service, and cutting costs doesn’t mean you have to cut corners.

Learn the ways you can reduce customer support costs this year and deliver an even better experience to your customers. You’ll find out how AI can help you achieve your mission, all while supporting your customers and your teams too.

Jump to section
Why prioritising improvements to customer support is essential Why cutting corners to reduce costs can harm your business 4 ways to reduce customer support costs while improving service (and how AI can help) How to adapt quickly to cost cuts and new ways of working Why AI is a sustainable solution for reducing support costs and making improvements

TL;DR

  • Improve service at the same time as reducing costs and you’ll increase profits while spending less on doing it, so rather than think of reducing costs as a dilution of your service, think of it as a laser target to help identify where the most value lies and go from there
  • Break down support costs to cost per enquiry, hire and retain top talent to avoid recruitment costs, make your support convenient to your customers, and let them self-serve
  • AI can help you track your cost per enquiry to reduce it, motivate your support teams, and offer self-service to keep customers happy and loyal
  • You might feel like you’re on a tightrope trying to reduce support costs without impacting service, but if you focus on what you need to invest the most time in to reap the biggest reward, you’ll make it to the finish line having achieved your goal
  • Using an advanced next-generation AI assistant, Barking & Dagenham Council saved the cost of 10,000 customer enquiries in six months (£48,000) and saw a 67% uplift in customer satisfaction

Why prioritising improvements to customer support is essential

Regardless of a shrinking budget, making continuous improvements to your customer support systems is a necessity for the long-term success and growth of your organisation. Elevating the quality of your support services strengthens customer ties, enhances your brand reputation, and allows you to stand out from the crowd ― all vital if you want to stay competitive.

Here are just some of the reasons why delivering an exceptional customer experience will continue to matter in both good economic times and in bad.

Grow a solid brand reputation

A strong customer support system helps build and maintain a positive reputation for your brand. When your customers feel supported and heard, they’re more inclined to share positive feedback and recommend your brand to others. Invesp reports “people are 90% more likely to trust and buy from a brand recommended by a friend,” so use this insight to your advantage to attract new customers organically and cement a solid reputation within your industry.

Increase customer retention

Great customer support directly impacts customer loyalty and retention. When you make improvements to your service to help provide a memorable experience for your customers, they’re more likely to stick around and continue doing business with you. Acquiring a new customer can cost five times more than keeping hold of an existing one, so work at keeping your customers happy to avoid this expense.

Increase revenue through up-selling and cross-selling

When you improve customer support, you not only address people’s specific needs and resolve their issues, it also helps you increase the lifetime value of each customer. As you deepen your understanding of people’s unique requirements, you’re better equipped to offer relevant products and services that appeal to them, so you can up-sell and cross-sell effectively. Giving customers more of what they want increases satisfaction, naturally generating more revenue.

Stand out from your competition

As customers come to recognise your dedication to giving them an exceptional experience, you gradually emerge as a leader within your industry. They don’t say “It’s not just customer service; it’s M&S customer service” for nothing! Founded in 1884, the iconic brand is still winning awards today for going the extra mile to delight customers with exemplary service, and recognition for good service can pass all the way down to individual team members. Like Danielle Faulkner of Legal & General Insurance, who was crowned a Customer Champion. Being able to celebrate good customer care in this way gives everyone a boost, inside and outside of your operations, helping to set you apart from competitors and gain a significant advantage in the market.

Why cutting corners to reduce costs can harm your business

Rather than think of reducing costs as a dilution of your service, think of it as a laser target to help identify where the most value lies and go from there.

If you try to cut corners, this often leads to a decrease in service or product quality, which can significantly impact a customer’s experience with your business. If cost-saving measures lead to longer wait times for help, less support staff, or less knowledgeable staff, the quality of service can drop noticeably and your customer satisfaction score will take a hit.

Poor customer support can result in at least half of customers walking away from a brand, says Zendesk. Their report finds “50% of consumers will switch to a competitor after one bad experience, and 80% will switch to a competitor after more than one bad experience.”

Since the average customer retention rate is 75.5%, a quarter of those customers won’t come back, and if that isn’t concerning enough, consider where the majority source of your revenue lies. Zippia confirms 65% of it “comes from existing customers,” so you won’t want to skimp on service and risk upsetting the customers that feed your brand.

Thankfully, there are new and affordable ways of delivering a consistently high service, so you don’t have to cut corners. Right now, McKinsey reports using AI is the “quickest and most effective route for institutions to deliver personalized, proactive experiences that drive customer engagement”.

4 ways to reduce customer support costs while improving service (and how AI can help)

There are lots of ways to reduce customer support costs, but if you can improve service at the same time as slicing chunks off your monthly budget, you improve your situation two-fold. You’ll increase profits for your organisation while spending less on doing it.

Here are some smart ways to approach the challenge and we’ll show you how AI can help you get the results you want faster and easier:

1. Break down costs to incentivise savings

If you haven’t thought about it before, isolating a single cost in your calculated efforts to reduce spending can be more motivating than focusing on your total expenditure.

Barking & Dagenham London Borough Council (B&D) were spending around £192,000 every month on customer support calls and emails, but when they broke that spending down to better see where their budget was going, they found every individual enquiry was costing them £4.80. Looking at the cost in this way helped their team consider the cost of every enquiry as it came in and think about how it might be reduced or even eradicated.

Cost per enquiry is such an easy metric to digest, lessening the number can quickly become a huge incentive for your whole team. To reveal your own cost per enquiry, simply take your total monthly support costs and divide them by the number of enquiries you get.

Using AI to help: You’ll pay pennies, not pounds, for an advanced AI assistant to handle each enquiry and using one makes budgeting easier too. Rather than pull in pockets of information from different places, you’ll be able to see all your customer enquiry data from all of your channels in one place to optimise informed decision-making and strategic planning.

2. Hire the right team (and keep them)

The true cost of hiring a customer support agent is more than you might think when you take into account holiday and sickness pay, pension contributions, training costs, equipment, and tax. If they leave, you then have to start all over again with fresh recruitment and training costs. You might have to account for a loss in productivity if the team left behind suffers and there’s a drop in service quality as a result. To avoid these costs, push to keep your agents happy.

One way to do this is to nurture empathy throughout your organisation. Recognising the daily challenges your agents face is key to developing resilient customer support teams. If they feel supported, they can also better support your customers and you’re then well on your way to developing robust, long-lasting customer relationships that contribute to business growth.

Using AI to help: Automate routine tasks so your teams can focus on more rewarding work and finding new ways to achieve empathy in customer service.

3. Make getting support convenient for your customers

Customers naturally want to get help at the exact time they need it, and these days they can, even if it’s 2am and your support teams are all tucked up in bed. People now also expect to receive that support across all channels, including your website, social media channels and apps, and although many companies may struggle to provide that, it’s possible to radically improve the omninchannel experience with the help of AI. Customers can then turn to you whenever and wherever they need you and know they’ll get a fast, reliable response. This naturally prompts an increase in customer satisfaction and, in turn, customer retention.

Using AI to help: Almost a decade of experience creating the most advanced AI assistants shows us 35% of customer enquiries come in out of hours when contact teams are offline. An AI assistant working round the clock can answer those enquiries, offering customers support at any time most convenient for them.

4. Let customers help themselves with self-service

Nobody wants to wait in a queue to have a question answered or their needs met and this one’s pretty simple to solve now self-service is everywhere. Having the option to find information for themselves empowers customers and releases your support teams from finding and repeating the same resources over and over again. Include everything your customers ask for or want to do most often in a self-service format to save everyone time and energy:

  • Personalised recommendations
  • Downloadable guides
  • How-to videos
  • Interactive tools
  • Webinars and online training
  • Tutorials

This can reduce the number of enquiries your teams need to deal with directly and gives your customers independence in finding things out easily for themselves.

Using AI to help: Launch an AI assistant to work 24/7 across every channel. 83% of Legal & General customers now turn to their AI assistant first rather than use traditional methods of contact like phone or email because they prefer instant responses through the day and night.

How to adapt quickly to cost cuts and new ways of working

You might feel like you’re on a tightrope trying to reduce support costs without impacting service, but if you focus on what you need to invest the most time in to reap the biggest reward, you’ll make it to the finish line having achieved your goal.

Right now, you’ll see customer service leaders choosing to automate customer support to offer faster, more convenient, and consistent support across multiple channels. Why? Because 65% of people have higher expectations for customer service today than they did 3-5 years ago and that expectation is being met with the use of advanced technology.

In healthcare and banking alone, Juniper Research predicts up to 90% of customer queries will be handled by AI assistants by 2027. Customer support is now expected to be instant.

Using an advanced next-generation AI assistant, council workers at Barking & Dagenham Council were able to automate 6% of all their customer calls straight away. In their first six months, it saved them the cost of 10,000 customer enquiries (£48,000). Even complex transactions or complicated processes can be automated by linking up your AI assistant with your business systems. As a result of automating customer queries, the Council has seen a 67% uplift in customer satisfaction, reporting the AI assistant is “exceeding customer expectations”.

Support your teams

  • It’s expensive and takes more time to tackle every one of your channels individually to see where you might reduce your costs and improve your service. An AI assistant handles customer data from all channels in one place, so all you need do is check your dashboard.
  • Be sure to track your progress to see where the most time is being saved and the biggest financial rewards are being gained. Start by setting customer service goals using a framework like Objectives and Key Results (OKRs) and report on progress regularly.

Support your customers

Why AI is a sustainable solution for reducing support costs and making improvements

Any efforts you make to improve customer service are likely to revolve around hitting a few key customer service goals, like maintaining efficiency and satisfaction in everything you do.

Ever-increasing dependability

First contact resolution is a good measure of efficiency, where customers get answers to queries without any need to speak with multiple departments or contact you more than once; they get their answers and leave happy. The more your AI assistant learns over time, the more enquiries it can solve from start to finish without any help from your teams, saving your resources. Since it never forgets information, an AI assistant can only grow more and more valuable over time.

Keeping customers and agents happy

Support teams need a deep-seated understanding of what your customers need, and that takes time to master, so relying on temporary or zero-contract agents to handle cost cuts can have a detrimental impact on service and customer satisfaction scores. You also want team members to feel invested in the positive outcomes of consistently improving service and that’s harder to do when your role isn’t permanent. When those temporary staff eventually leave, they take everything they’ve learnt about your company and your customers with them too.

That’s why customer service leaders are introducing AI-driven assistants to cut customer service costs without having to dilute the strength of their support teams. On the contrary, an advanced AI assistant can quickly evolve to be the most expert member of your support team, learning at a phenomenal rate that surpasses human capabilities, and your real-world agents can even come to rely on it as a source of reliable information too that helps them day-to-day.

High returns and increased customer satisfaction

Barking & Dagenham Council were successfully able to reduce customer support costs and significantly increase customer satisfaction with the help of an advanced AI assistant and achieved a 533% return on investment (ROI) in just nine months. To see what you can achieve for your organisation, calculate your estimated ROI today using our handy savings calculator, or go ahead and dive right in to start making savings in customer support today.

Launch an AI assistant now Or ask us to do it for you