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How Customer Service Can Be a Profit Generator

We’ve all heard horror stories from customers about their bad customer service experiences. The unreturned emails, the hours-long wait on the telephone, the self-service customer service platform that can only resolve minor issues. 

As a successful online merchant, you already know the value of good customer service. But did you know that customer service can also be a profit generator? Providing your customers with an effortless purchasing experience and responding promptly and professionally to questions and concerns increases brand loyalty, creating repeat customers.  

If you’re not sure how your customer service department is performing, metrics can help.

Related: 5 tips to deliver amazing customer service

Top 5 Customer Service Metrics to Track

The following metrics offer you a good view into how your business is performing while also serving as an early warning system for any trouble areas that may need to be addressed. 

Customer retention rate

As important as it is to attract new customers, it’s more important to retain existing customers, particularly since it costs a lot less to retain a current customer than it does to acquire a new one. To calculate your customer retention rate, subtract the number of new customers from your total customers and then divide that number by the number of customers you had at the beginning of the period. For example, if you have 300 customers to start the period, 315 at the end of the period, and 20 new customers, your customer retention rate would be (315 - 20) ÷ 300 x 100 = 98%. 

Average order value

An important part of ecommerce accounting, all online merchants should be tracking average order value or AOV. This metric can be particularly helpful for those that have implemented an organized upselling or cross-selling effort. AOV can be tracked over any period of time, though it’s most useful if used monthly to track how successful customer service is with their upselling and cross-selling efforts.  

AOV is easily calculated. All you have to do is take your sales totals for the period and divide it by the number of orders placed for that same period. For example, if you have sales of $15,000 and 650 orders, the AOV would be $23.08. 

Repeat purchase rate

The repeat purchase rate or RPR provides you with the percentage of your current customers that purchased an item more than once. While this metric may not be particularly useful for those selling big-ticket items, online merchants selling lower cost items will find this metric useful. To calculate your repeat purchase rate, divide the number of customers that have made multiple purchases by your total number of customers. 

Purchase Frequency

Like the RPR metric, the purchase frequency metric or PF focuses on repeat customers, with the PF showing you how many times an individual customer makes a purchase during a set period of time. To calculate purchase frequency, divide the number of orders in a set period by the number of unique customers. The results provide a top-level view of how frequently your existing customers made a purchase. 

Support Rate

How many of your customers need support before they make a purchase? If the number is high, chances are that your website needs some adjustments.

And for those that do have questions, have you provided an easy way for them to contact you? Do you have an FAQ page that may help to answer some of their questions? Making it easy for your customers to contact you helps to ease frustration should they have any questions or concerns.

Related: 10 easy ways to automate ecommerce customer service

While there are variations on the metrics, as well as a long list of others, tracking these ten metrics can go a long way towards keeping your business profitable well into the future.

5 Tactics to Drive Profit From Customer Service

When you are looking to increase your profit margins, the first thing many eCommerce brands think to do is train their customer service team on how to effectively upsell and cross sell more customers.   

Upselling increases the value (and the cost) of the product a customer is interested in. For example, if your customer purchases a bicycle, giving them the option to upgrade the basic tires to a more deluxe brand is upselling while offering your customer a selection of bike helmets would be considered cross-selling. Make sure that you’re doing both.

Related: CX centered strategy reduces marketing costs

However, most brands implement this haphazardly and then wonder why it isn’t working or their customer satisfaction scores are taking a nosedive. 

Here are a few additional ways you can drive more profit through customer service while still providing a top-notch experience both during and after a sale. 

1. Be responsive

Good, responsive, reactive customer service is table stakes these days. You should be responding to customers’ enquiries in a timely fashion—be it through email, phone, live chat, WhatsApp, Instagram, etc. However, the brands that are building superfans and increasing sales the most are experts at proactive customer support.

Related: Instagram DM automation for customer service

Let’s take the luxury jewerly brand, Kendra Scott as an example. They have basically become the de facto brand for southern sorority girls in the U.S. 

When Bama Rush took over TikTok and hundreds, if not thousands, of sorority girls, were showing off their Kendra Scott accessories in their OOTD TikToks, Kendra Scott was actively in the comments and posting their own videos. This level of social listening and proactiveness can help you build superfans. 

2. Don’t stop providing service after the sale

While it’s always nice to make that sale, customer follow-up is a must. Let your customers know when items they’ve shown interest in go on sale. Send them a text message with a link to special pricing, or give them a one-time discount code that they can use if they return to your site and purchase another item. 

However, your follow-ups don’t always have to offer a discount or coupon code. They can also offer helpful tips about the product(s) they bought. This is something that Judy, the survivalist brand, does extremely well via both email and SMS marketing. 

3. Build relationships 

Going above and beyond the norm to make your customers feel appreciated builds loyalty and can also help increase profits.

For example, many brands send automated birthday emails with a discount on a customer’s birthday. 

Other brands, like House of Wise, a CBD gummy brand, turn to social media to share the love. They use Instagram Stories to highlight and show appreciation for their customers. 

4. Keep things new and exciting with limited access runs 

@crumblcookies

🥛 CHOCOLATE FT. OREO® | 🥜 PEANUT BUTTER JAMWICH | 🍫 CHOCOLATE MALLOW CUPCAKE (NEW) | 🧸 GRAHAM CRACKER FT. TEDDY GRAHAM® | 🍉 WATERMELON

♬ original sound - Crumbl Cookies

Offering something new and exciting that your customers can take advantage of before the general public is a great way to create more superfans and increase profits.

Many brands do this through email and SMS marketing. They launch a massive email and text campaign, announcing the new product to existing customers while providing a special discount code, helping to drive sales in the early days of the product launch.   

Increasingly, many brands, like Crumbl Cookies, are turning to TikTok to do the same thing. Each week, they introduce new cookie flavors that are only available for that week on TikTok. This induces FOMO and leads to long lines at their retail establishments and tons of new cookie orders on their ecommerce site.

5. Create repeat customers through a loyalty program 

A customer loyalty or rewards program can help you increase revenue while providing valuable insight into your customers’ buying habits. They can also offer select pricing to certain customers, offer special sales events, and help build customer loyalty to your brand. 

For example, The Honest Kitchen has a loyalty program which offers exclusive deals on their pet food via retail and ecommerce. 

They know that not every customer will sign up for their loyalty program. So, they also offer discounts for recurring orders. 

With so much competition, providing excellent service to your customers is paramount to your success. A satisfied customer can be your best brand advocate. In fact, according to a Salesforce survey, 91% of those polled said they’re more likely to make a repeat purchase after a positive customer service experience. Treating your customers with respect will help you increase your profit while creating a loyal customer base.

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This is a guest post from our friends at specialist ecommerce accounting firm Bean Ninjas.

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