14. Support + Revenue 💰

Some tactics for correlating support work with specific results for the bottom line of the business.

Howdy 👋

A few weeks back, I had the opportunity to moderate a discussion all about customer operations at the Operations Nation cONference. Today’s topic touches on one of my personal takeaways from the conversation - the value of correlating customer-focused work with business outcomes (revenue, churn, and expansion).

Hope you’re having a great weekend thus far! We’re potty training our two-year-old so we’re toting a toilet around in our trunk.

See you next week!

Jeremey

Thanks for being a part of this newsletter. Each week, I share ideas, frameworks, stories, and links centered around solving problems and helping customers based on my time at Automattic, Zapier, and currently, Ness.

Say hi at jeremeylduvall@gmail.com. I’d appreciate the note!

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Support as a Cost Center Versus Value Driver

Over the past few weeks, I’ve seen at least 10 different posts on LinkedIn echoing a similar sentiment. Customer Support is not a cost-center to the business. It’s a value center; It’s a growth driver; It’s a brand builder.

I don’t disagree!

After 10 years working directly in support and leading frontline teams, I understand how support delivers value to the business. However, these statements gloss over two complications.

1. Support is a cost to the business. Therefore, we have to be concerned with efficiency. (A fact that frequently gets lost in the conversation.)

2. Support can also be a value driver. (But, it’s tricky to capture.)

Complication #1: We Can’t Forget About Cost

There’s an unspoken assumption underlying these discussions - more support is always better. That’s not necessarily true.

At the business level, the purpose of support is again to impact conversion, retention, expansion, or churn - either directly by resolving customer inquiries or indirectly by improving brand and word-of-mouth (think USAA’s support reputation).

Within the Support function, however, we get tied up in terms like “delight” and chasing stories like Zappos.

5. Delight 🤔

The net result is that Support teams can end up pursuing metrics that might not be relevant. For example, there’s certainly a delight factor for customers associated with 24/7 live phone support. However, it also comes at a tremendous cost to the business. The costs might outweigh the benefits to the business.

We can’t forget that Support is ultimately about delivering amazing value to customers with clear value to the business (but all at an effective cost). This varies depending on the business, profit margins, etc.

Complication #2: Learn to Speak the Big Four

The cost side of the equation is clear. Headcount and tooling are direct expenses that impact the bottomline of the business.

The value side is less obvious. Support teams usually:

1. Presume that the connection between great support and increased revenue is self-evident and needs no explanation.

2. Convey value in intermediate terms like response times, first contact resolutions, and CSAT.

   

   When Support teams talk about their value to the business without giving specifics.

This value communication disparity becomes more evident when you contrast against other teams like Product and Marketing. As companies chase revenue, both of these functions typically fall right in stride running A/B tests and shipping new iterations that directly tie to revenue.

Support teams need to be proactive in demonstrating the value of support by directly correlating their work with the big four - conversion, retention, expansion, and churn.

How Do You Speak the Big Four?

Here are some ideas for correlating Support outcomes with our four revenue drivers.

1. Conversion

In product-led growth companies that rely heavily on the product itself as the driver of acquisition and growth, the primary goal is for users to see value in the product as soon as possible. In these scenarios, you probably have a free trial that you’re hoping to convert to paid members.

Do this: Identify new customers in your queue (especially those on a free trial). Prioritize responses to those customers. Then, measure the conversion rate of the free trials you talk to compared with those you don’t talk to. Ideally, you bucket out response times to see how that impacts conversion as well.

In some companies, Support is an acquisition channel (driving word-of-mouth, brand image, etc). Buffer is a prime example here; Kevan Lee wrote about how they attributed a portion of the customer experience team’s budget to Marketing for this exact reason.

Do this: Segment your NPS scores into two buckets - customers your Support team engaged with and everyone else. Provided you’re not biased in how you’re measuring NPS (only after a support inquiry, for example), we’ll hopefully see a positive increase in NPS for those that engage with our Support team. (And, separately, demonstrate that positive NPS is directly tied to conversion, retention, etc.)

2. Churn/Retention

Support teams get a front row seat to churn drivers since the same problems seen in the queue often lead to cancellation. Let’s look at two ways Support can get closer to the problem and have a direct impact.

Do this: Use cancellation surveys to understand problems and preempt potential cancellations with Support. Even better, look through the data collected during cancellation surveys. Identify one trend or repeating issue. Then, hypothesize leading behaviors indicative of a potential cancellation (e.g. signs of frustration). Show up proactively at that moment to help out. Measure the decrease in rate of cancellations as a result.

Do this: Beef up your weekly/monthly top issue reports with velocity, customer segmentation, and impact on revenue. The reports will instantly become more valuable. Squashing 3 bugs is one thing. Squashing 3 bugs representing $100k of MRR is another.

A few notes on the terms:

• Velocity is a measure of how many new reports of this issue you’re getting per day/week/month. Generally speaking, high velocity issues get priority.

• Customer segmentation tracks the plan level of the those impacted. Obviously Enterprise-level customers matter a great deal more than free ones.

• Impact on revenue might stop at the plan level or it might factor in lifetime value.

For example, you might set up a Google Sheets integration that automatically tracks tickets with a specific tag and measures the date of the report, subscription level, and age of customer. The bug that’s impacting 30 customers now becomes the bug report with an average of 10 new reports a day and impacting a total of $50k MRR.

3. Expansion

Ideally, your Support team helps customers unlock more value within your product and grows revenue per customer as a result. This is often the trickiest area to measure because 1) upselling is tricky to navigate within Support and 2) we’re dealing with a biased sample of customers¹.

Do this: Similar to growth, the easiest place to start is by segmenting customers that reach out to support compared to those that don’t. Measure contraction and expansion for both customer sets. Ideally, the segment that interacts with Support sees less contraction and more expansion.

If that’s difficult to accomplish for some reason, correlate Support interactions with user behavior indicative of stickiness. For example, at Automattic, that behavior might be “number of posts published.” At Zapier, it might be “completed tasks.” At Netflix, it might be “hours watched per week.” Ideally, the cohort of customers interacting with Support are growing behavior month-over-month.

Over to You

Bottom line: Support is a value-add to the business, but we need to back up those words with specific metrics to really drive the point home! (And, we can’t forget about efficiency.)

I’ve shared a few ideas above, but I’m always curious to hear what you think!

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Misc.

I loved this tweet thread about effective communication with busy people. Forget the busy part - these are just good strategies in general.

6529 @punk6529

1/ On Being Efficient With Busy People This is a thread for people at junior to mid stages in their career (people at senior levels generally operate this way and, at very senior levels, they all operate this way). It is updated for 2022 practices

Molly Graham has been writing some great content. I had a lot of takeaways from this post specifically.

Hate to break it to you, but your team is full of under-performers

Finally, I came across The Jungle Gym, which is all about building an effective career. This post about a high-quality information diet (with limited attention!) was great.

The T-Shaped Information Diet

1. Customers that contact Support are more engaged generally and may behave differently than other customer segments.