4 Reasons why your Customer Service Needs to be a Profit Generator

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Is your customer service center a profit or cost center?
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Is customer service a cost center or a profit center? If you answered ‘cost center’, right now is the perfect time to challenge that assumption. Read on to learn four reasons why this is the case – and how to make the shift within your company.

The traditional outlook on customer service

A cost center is a function or department – like customer service – that costs your business money to operate but doesn’t actively generate revenue. Customer service can be compared to the pit crew for NASCAR. They are generally relegated to the background and don’t merit the spotlight as often as sales and marketing initiatives — or in this comparison, the race car drivers. In fact, most of the time, the pit crew is only mentioned when something goes wrong with the car’s performance. The same is true of customer service when customers are unhappy. But, just like a capable pit crew, every enterprise needs customer service to support internal operations and boost customer relationships. And just like in NASCAR, if your pit crew isn’t any good, your race cars can’t win. 

Customer service – as a profit center?

But there have been some innovations happening at the racetrack. 

Forward-thinking companies have been transitioning customer service from a cost center to a relationship-based profit center. Companies recognize that customer service agents and field service technicians are keepers of the customer data. This positions them to build the kind of valuable customer relationships that can more easily drive revenue through upsells, like extended warranties, service contracts, or replacement parts. Instead of the sales team reaching out to the customer with a sales pitch, the offer comes from the customer service agent or technician who understands the customer and recommends products and services that add value.  

 This idea of building profitability into customer service is not new. Service companies have long recognized the importance of enhancing the customer experience to drive more significant revenues through loyalty. But today, putting these intentions into practice is finally possible due to four key drivers.

1. Recognition that relationship marketing drives revenue

To transform customer service into a profit center, organizations are realizing that they must be fully focused on the needs of each customer, driving value through effortless service throughout the customer journey. Whether it’s improving self-service channels to provide customers with speed and convenience or building personal connections through assisted channels, making it effortless for customers to interact with company systems, services, and products ultimately fosters brand loyalty and strengthens relationships with the brand.

2. Rise of digital engagement channels

Investments in digital engagement channels powered by AI are rapidly increasing. According to the IDC, the two fields attracting the most AI investment are automated AI-powered customer service agents at $4.5 billion and sales process recommendation and automation at $2.7 billion. These channels are pushing the CX to the next level with virtual assistants for self-service, visual searches that prompt next-best-actions, and AI-assisted product recommendations. The pandemic has further accelerated the adoption of these engagement channels with a new digital-first approach to everything.

3. Greater cross-department collaboration 

Companies are empowering employees across functions to collaborate and go the extra mile to satisfy customers. For example, if a technician detects an issue that should be fixed proactively – such as a part that looks like it’s beginning to rust – passing this info to the sales team in order for them to reach out to the customer would be an example of cross-department collaboration. However, empowering the same technician to access the customer’s warranty information, look for available deals, and make the sale during the service call, is the real future of collaboration. 

4. Need for cost-optimizations in customer service

In today’s economic downturn ushered in by the pandemic, customer service leadership must find ways to pivot strategically and find sustainable cost optimizations that will allow for business continuity without compromising the quality and efficiency of the brand’s service. With labor accounting for 70% of customer service costs, offloading interactions to self-service channels definitely lowers costs. But when that labor is able to directly drive revenue to the company, the business case becomes much more attractive.

Customer service will always be a cost center – unless your business is strategically determined to make sure it’s not. By building and harnessing relationships with customers, customer service can actively increase the business’ overall revenue, and make the move from a cost center to a profit generator.

Shifting customer service from cost center to profit center

But merely recognizing that customer service can be profitable is not enough to make the shift. Action must be taken to become a revenue center. To learn how to accelerate the move from a cost center to profit center, read this Report about the 7 Steps to Revenue-Producing Customer Service Teams.

This article was first published on the TechSee blog.

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