This blog showcases a single, easy number to help folks understand the value of the new social media environment.
Consider the cost-to-serve customers through an online support community. For service platform optimization, reducing cost-to-serve may be one objective, but certainly not the only objective. It is a good starting point considering the potential impact for improving the bottom line.
This blog entry is the first of a series on developing a service platform optimization model to quantify the benefits. I'm starting with channel cost analysis and specifically with the community channel - a single, easy number that projects huge cost savings potential. This discussion projects cost per contact for the community channel in comparison to a benchmark call center costs; I think you'll be wowed!
The primary data source for this blog is the Forrester report, The ROI of Online Customer Service Communities, developed from a survey of "20 companies, experts, and vendors," that also includes a Total Economic Impact (TEI) model that takes into account startup and recurring costs in people, processes, and technology categories. Consider buying this great Forrester report if you have not already. Note, you can access a similar Excel model here via Scribd (free login required).
My cost-to-serve number assumes a community is already in production. That the community already exists is a BIG assumption. I'm not intending to marginalize the effort required to develop a community – I just want to impress upon you why you should be thinking about going through that BIG step.
One cost element assumption Forrester notes based on their survey results is a community moderator's workload. A typical moderator review process is modeled at 15 minutes every 2 hours, from 9 a.m. to midnight. Note: constant moderation is not necessary after a number of community super users are secured and enrolled to represent major content providers. Given this data point, I quickly derived a total annual moderator cost of $28,000:
Hours of the day:
Total FTE moderation time (hrs):
Annual FTE cost:
Total annual moderator cost:
Next, I built the below table to identify possible per-contacts costs. The lowest moderator to participant level represents a breakeven point against a live call agent, benchmarked at $5.50 a contact (source). From there, savings benefits increase based on how much one believes a moderator can be leveraged:
Number of subscribers per moderator (annually):
Live call agent cost per contact:
Cost per contact:
Median = $5.50
A more quantitative understanding of the community member to moderator ratio is required, but initial queries suggest that a 50,000 to 1 ratio is appropriate for support communities that start at the FAQ level of issue complexity and organically grow from there. I would love to hear your feedback on this. What is an appropriate member to moderator ratio for your organization, and why?
I hope this quickly illustrates to you the potential benefit of online customer support communities – just one use of the community support channel. And reduced cost is just one benefit. Read this blog by an actual Community Manager on additional potential benefits.