Transforming the customer service center

Don’t settle for expense when you can have profit

By Bob Davis

Your customer service department does not have to be an expense. It can indeed be a profit center. Yes, you read that right -- a profit center! I will explain how in a minute, but first let me tell you a story.

I got a call last Monday from my father. He and my mother spend their winters in Florida and they were packing to make their migration north when he gave me a call.

“Bob, you have got to come down here to Florida and help this [expletive deleted] paper.”

“Why?” I asked. “What’s wrong?”

“I had to call them seven times to get my paper put on a temporary stop.”

“What happened on the first six calls?” I queried.

“Well, you know I don’t hear well,” he said. “The first six times I called, I could not understand a word they said.”

“So what happened on the seventh call?” I asked.

“My neighbor had the number for the office downtown, a number that doesn’t go overseas, and I called them,” he said. “The lady who answered was very nice. She says she gets a lot of calls like this. I’m keeping her number!”

When we do the math on why a customer care department here in the United States can be a profit center, we won’t count the cost of multiple calls to your overseas outsourcer. We won’t count the costs of the hundreds of calls a day that now come to the few people still answering the phone stateside. We will, however, count the value of doing an excellent job.

Consider these facts about cancellation calls:

• One of the performance differentiators between an average customer service operation and an excellent one is the saves rate on cancellation calls. With good effort, an average operation can get a 20-percent saves rate. An excellent operation can get a saves rate of more than 40 percent.

• Ten percent of all calls coming into the typical customer service operation at a newspaper are cancellation requests. In a paper with circulation of 200,000 customers and 600,000 calls a year, that’s 60,000 cancellation requests. An extra 20 percent on the saves rate means an extra 12,000 saves per year. That's 12,000 fewer paid in advance orders you will need to write. At $40 per order, that adds up to $480,000 per year.

Now let’s look at EZ Pay conversions:

• Industry statistics say that a subscriber on EZ Pay will keep the subscription going twice as long as someone who is not on EZ Pay. So every EZ Pay sale is worth $40 to the paper (one less order to write).

• The average customer service operation converts less than one percent of call volume to EZ Pay. An excellent one gets more than six percent. An extra five percent in EZ Pay conversion on call volume of 600,000 calls per year means an extra 30,000 EZ Pays per year. At $40 each, that’s $1.2 million dollars to the enterprise.

Assuming it costs you $1.50 per call to take calls with excellence, your cost of operation is $900,000 per year for 600,000 calls. Your income from just the cancellation saves and EZ Pay conversions is almost $1.7 million—more than $780,000 in profit!

Is it easy to get these kind of results? No, but I have seen it done in top-performing newspapers around the country.

The question I put forth is this: At a time when the economics of the newspaper industry are so challenging, why settle for your customer service department being an expense when it could be a profit center?