Sunday, 3 July 2011

The cost of customer service

I've been supporting a review of email enquiry management, which made me think back to an article by Gerry McGovern about the relative cost of customer service. Digging deeper reveals some very interesting UK local government figures on the cost of managing transactions via a website, versus on the phone, versus in person.

Gerry quoted a 2008 benchmarking study by the Society of Information Technology Management (SOCITM) which collected data from a number of local councils across the UK.

Their research suggested that the average cost of a web interaction is 27 pence, the average cost of a phone interaction is £3.76 and the average cost of a face-to-face interaction is £9.34.

Digging around a bit more (both on the web and on the members-only public sector Communities of Practice forum) I found more figures from SOCITM and other local government collectives investigating the same costs. These follow on studies covered 2009 and 2010, as well as sub-groups in the North West of England and in Wales.

They all said the same - the cost of customer service via the web is significantly cheaper than in person or on the phone.

Across 5 different studies looking at the cost of  dealing with enquiries and transactions the web was:

  • between 88 and 93% cheaper than phone, and 
  • between 95 and 97% cheaper than in person.

When detail was present alongside the costs, the figures always related to median values and covered samples of between 52 and 85 different councils.

In his article, Gerry says:
Properly managed, your website is the most cost-effective environment in which your customers can complete their tasks.
Note the magic words there - "properly managed..."

The web is almost always the poor relation in customer service. Often managed by techies or by overworked people with full time jobs already. It's an afterthought. Or even worse, it's a victim of vanity publishing and print publication practices.

It can only deliver these kinds of savings when it's customer focused and user friendly - closely managed to reflect end user requirements and clear business priorities.

Also reported alongside one of the sets of figures I came across were some customer satisfaction ratings where phone ranged from 89 to 99%, in person from 80 to 95%, and the web from 48 to 49%. (Source: The Socitm Insight Channel Value Benchmarking Service leaflet 2009)

Which, I think, makes the point perfectly.

Your website can thrive in a recession - article by Gerry McGovern

Socitm calls for council web channel switch - article on Guardian newspaper website

Web improvement and channel shift - presentation at SOCITM 2010 by Lee Gripton and Ceri Evans on Slideshare

Managing The Web In A Recession - white paper by Lisa Welchman


  1. I wonder if the cost of web based customer service is significantly cheaper vs phone or in person because its much harder to ignore a person's real needs while you are actually talking with them.

  2. ...except no business pays per interaction or call, rendering this "finding" irrelevant and misleading. Additional channels mean incremental costs.

  3. Martin - I suppose it depends what a person's "real needs" happen to be. If your organisation finds itself answering the same queries over and over again then these could be potentially delivered by a website. The more you deliver quickly and conveniently via the web, the more time customer service reps have to deal with the unique enquiries. If your customers are visiting your website to get contact details to make an enquiry, perhaps they'd prefer an immediate answer online in the first place?

  4. Robert - "no business pays per interaction or call" - true, but they do measure the cost of interactions in this way.

    Additional channels bring extra costs; however different channels have their own strengths and weaknesses, so surely the challenge is to make best use of each? Generic, frequently undertaken tasks or enquiries are best served by the web; less frequent or more personal enquiries are of course best served in person or on the phone.

    The web can't do everything, but if you're employing people to give the same information out over and over again, this can't be a good use of resources.

    I think the challenge facing most organisations is how to get the knowledge and experience of the customer service representatives integrated into the website content management process.