It is not so difficult to calculate Support ROI as it may seem at first sight. We can offer you as many as four ways for various situations. Here we explain the difference between the methods and show the calculations.
What is ROI?
Let us first make sure we are on the same page: ROI (return on investment) is an indicator that shows resource investment profit. The index is expressed as percentage and helps determine what is efficient and what needs to be improved in the Company.
ROI for the Sales Department is the easiest to calculate. Use the formula:
Changes in team work are visible almost straight away — the more money a manager brings, the more cost-effective their salary is. ROI for the Support is more difficult but no less important to calculate.
Why do you need to calculate Support ROI?
A high quality of communication with your customers stimulates sales and increases LTV (lifetime value). 52 % of consumers will make an additional purchase if their conversations with the Support make them happy.
The Support influences the churn rate as well. It can be reduced by 67 % if customers’ issues are addressed as early as during the first contact.
Besides, a regular customer brings on average 67 % more money than a new one does, taking into account that it is five times cheaper to retain buyers than to draw them.
The Support has an indirect influence on many Company KPIs. If you figure out how to bring investments in the Support into correlation with its income, you will be able to optimize the work of your employees and save money.
How to calculate Support ROI
Approach 1 — Classic
The below formula is generally used to calculate team ROI:
This is the simplest calculation option. It is perfect for Sales Departments but more challenging for Supports. Let us take an example of a made-up service “Fitness in socks” that offers a monthly subscription to online workouts for RUB 10,000 per month.
There are three people in the Company’s Support, each earning $2,000 per month. It means that the salary budget is $6,000 per month.
The basic ROI formula for such conditions will look like this:
Let us assume that the managers have sold additional services to customers for $500. The formula will become a bit more interesting, but the value will remain negative.
However, even this figure can be a starting point if your Support makes up-sells or cross-sells. But still, the Support team more often influences sales indirectly, so the second calculation method will be handy.
Approach 2 — Cohort
Let us assume that 20 customers came to the Company in January. Of that number, 15 customers remained in February, 13 in March, and so on. A six-month graph is as follows:
All customers who have come during the same month are called a cohort. The January cohort brought the Company 70 payments or $35,000.
If those customers had not communicated with the Support, the graph would have been different:
No customers of the January cohort remained in five months: 44 payments were made and the Company gained $22,000.
So, the Support brought the Company RUB $35,000 − $22,000 = $13,000. Let us return to our initial formula:
We have calculated one cohort only — new customers come every month. There are 12 cohorts per year. Therefore, Company’s profit for 12 months will be $13,000 × 12 = $156,000.
Approach 3 — Technology-based
It will be useful when you implement new technologies and want to estimate their return. The essence of the formula remains the same but the calculation requires different parameters:
You should include expenses for software, trainings, and operation into the implementation cost. Your results will reflect Support team’s contribution to customer retention and additional sales.
Let us assume that our Company has decided to implement OmniOmni. The monthly cost of the service is $245:
- WhatsApp Business API with a deposit — $175;
- Viber — $20;
- Facebook — $20;
- Operators — $30 for three operators.
You don’t have to additionally pay for software installation, and you can use the Knowledge Base for free to learn how to work with the service. Let us only add a 6-month payment for the service to the expenses — $1,470. Even $1,407, because OmniOmni has a 15 % discount for Viber, Facebook, and operators prepayment.
Thanks to the chat center, operators can process customer requests quicker and customers can communicate with the Company in their favorite messenger. As a result, more customers renew their subscription:
There are 86 payments or $43,000 against $35,000 without a chat center. The income from technology implementation is $8,000, and ROI will look like this:
Approach 4 — Comparative
Investments in the Customer Support can bring various rewards. Expenses for sourcing, salaries and bonuses, staffing increase, software and equipment, trainings, and new support channels — ROI can be calculated for every individual parameter to make the investment more efficient. Let us calculate in four steps.
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Determine customer actions that bring you profit
Write down each action and answer the question: how can the Support influence these actions?
For example, OmniOmni’s customers can:
- pay for the next month of the service subscription if the Support is available 24/7 and resolves issues in a couple of minutes;
- connect new tools if the Support has helped them find a new efficient way of addressing business tasks;
- spread the word about the service on social media for colleagues if the experience from communication with the Support team has exceeded the expectations.
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Build logical connections
Connect Support processes with customer actions:
“When (Support action), our customers (customer action).”
For example: “When the Support team addresses customer issues during the first contact, our customers continue to use the monthly subscription.”
Or:
“When the Support knows and considers customer needs, our customers buy more than those who do not communicate with the Support team.”
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Select indicators you can measure and influence
You should answer two questions:
- How can your Support prompt such actions?
- What indicators will you use to measure it?
The indicators are subdivided into two categories — direct and indirect.
The direct ones measure actions that have a direct influence on ROI. They are net promoter score (NPS), customer satisfaction score (CSAT), cost per contact, call cost, lifetime value (LTV), retention rate, and the number of requests.
For example: “The LTV of customers who communicate with the Support on a regular basis is X % higher than the LTV of other customers.”
Or:
“When the waiting time is less than an hour, the customer satisfaction score rises above 94 % and the retention rate increases in such months.”
The indirect indicators make it possible to estimate how the Support collects customer wishes regarding product improvement. During conversations, operators can learn about desired functions and unresolved pain points. This information is priceless for departments of sales, development, and marketing, as well as for product owners.
When the Support team has skills and resources allowing for collecting such data, the entire Company works more efficiently. For example, OmniOmni can transfer a chat to another department and add an internal comment describing the issue.
Every company will have its own method of measuring such indicators. Here are some ideas:
- count the number of error messages per month;
- summarize Support’s proposals on new functionality;
- determine the income from requests for sale received via the Support.
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Create hypotheses and test them
You have determined how the Support influences profit. Now you can create hypotheses and calculate ROI.
For example:
“A Support employee spends three hours per week addressing routine customer questions. One hour of operator’s work costs $12.5, that is $150 per month or $1800 per year. If we implement a chatbot for $192 per year, we will save $1608 annually on this employee alone.”
Or:
“If the Support communication form is more visible, 20 % more customers will text us. Since 50 % more customers renew their subscription after communicating the Support, we will be able to retain more customers and increase our income.”
Every hypothesis has to be tested and monitored for some time. You will eventually determine what is efficient for your company — forecasts will become less risky and more justified.
Control your ROI
When you see the result of investments in the Support, it is easier to plan further work. You can see what actions are more profitable: to hire a new employee, to connect automation, or to send operators for training. The calculations in this article are approximate. Put your data in the formulas, and you will know the return of your Support.
Thanks to OmniOmni, you will reduce your expenses and, consequently, increase your Support’s ROI. Text us via the widget in the lower right corner to connect the chat center.
