5 Things Every Call Center Leader Should Know about the Cost of Customer Acquisition

By now, call center leaders are well aware of the impact excellent CX has on customer loyalty. Delivering satisfying customer service experiences can build strong relationships that can turn happy users into brand advocates. Taking care of customers is as important as ever these days because their expectations rise and loyalty can be fleeting.

What does it take to find new customers? Time, effort and resources. Smart companies measure Customer Acquisition Costs (CAC) to understand how much money they need to invest to attract new customers. They use this information to make informed decisions about sales and marketing activities.

Acquisition cost and Customer Lifetime Value (CLV) are closely intertwined, and contact centers play a vital role in ensuring the economic performance of a business.

What Is the Cost of Customer Acquisition?

Customer acquisition cost is a business metric that measures how much money sales and marketing must spend to win a new customer over a specified period of time.

What about Call Center Expenses?

If a contact center provides sales support, sales-related expenses should also be included. This can range from inbound operations that take orders to outbound calls that are dedicated to lead generation or sales.

The call center cost categories that are included in the CAC calculation could cover all or part of:

• Salaries and benefits of agents, supervisors and support staff.
• Costs of facilities.
• Software costs.
• Telecommunications costs.

What Is the Relationship between Customer Acquisition Cost and Customer Lifetime Value?

Once the cost of CAC is calculated, it is convenient to compare it to industry standards. This way the company will know if it is in the same stadium as its competitors. But ultimately, you have to compare the CAC with the CLV to know if the investment to obtain a new client is worth it.

Lifetime Customer Value (CLV) is a measure of how much an average customer will spend on a company’s products or services over the duration of the relationship.

5 Things Every Call Center Leader Should Know about CAC

1) Inbound Conversion Rates Are Essential to Reduce CAC

In call centers that accept customer orders, conversion rates are important. Each prospect that becomes a customer lowers an organization’s customer acquisition cost, which in turn makes a business healthier financially.

Agents play a key role in increasing conversion rates. Do they see themselves as passive order takers or proactive sellers? If agents help callers place orders, they need to have basic sales skills. They need to know how to identify needs, provide solutions, recommend additional items without being too pushy, and close the sale.

This means, of course, that agents need sales training and perhaps some incentives for added motivation. They also need to have good technical tools, for example a unified agent desktop that can be integrated with CRM software, to personalize interactions and offers.

2) A Predictive Dialer Can Optimize the Results of an Outbound Campaign

If a call center runs outbound campaigns, the first step in making a sale is to land a potential customer. High connection rates offer agents more opportunities to close sales and lower customer acquisition costs.

To do this, industry-leading dialers empower contact centers by allowing them to choose the correct dialer strategy for each outbound campaign. The dialer will monitor the statistics and adjust the dialing algorithm throughout the campaign. Thus, the predictive dialer will simultaneously dial multiple calls for each agent.

3) A Great CX Creates Promoters

One of the most effective ways to win new customers is to have someone else recommend a brand. A referral from a trusted source is more effective than most forms of marketing and is not an additional expense for businesses.

Organizations delivering satisfying customer experiences will foster long-lasting, loyal relationships that turn a high percentage of users into brand advocates who are more likely to refer to friends and family.

These brand advocates are also known as Promoters, which is a Net Promoter Score (NPS) -based label. Net Promoter surveys ask customers how likely they are to recommend a brand to friends and family. Promoters, in addition to recommending a product or service, also buy more frequently and have longer relationships, which means they have a higher CLV.

Call centers have the ability to increase the number of Promoters they have by always providing excellent CX. Going the extra mile to resolve a customer’s issue can turn even the ultimate Detractor into a Promoter.

To measure the percentage of Promoters and Detractors, customers are periodically surveyed to determine the NPS. Using the results allows you to further improve the CX and get more users to recommend the brand, reducing the cost of customer acquisition and greater profitability.

4) An Excellent CX also Leads to a Higher CLV

A commonly used statistic holds that it is five times more expensive to acquire a new customer than it is to keep an existing one. When this is taken into consideration, it becomes very clear why companies are so focused on delivering CX that fosters customer loyalty. In fact, 87% of consumers are willing to buy more products from companies that provide exceptional experiences, and 81% are more likely to recommend those same companies. In other words, a great CX generates more revenue and new customers.

However, it is highly likely that 80% of consumers will switch brands after a bad customer service experience. Relationships are built on trust and nothing degrades it as much as a bad interaction with the call center.

5) Managing Call Center Costs Is Essential to Optimize CAC

Contact center leaders are used to managing tight budgets. But now they have another motivating reason for finding ways to reduce or maintain costs. When a call center is involved in sales, some or all of the costs are included in the CAC.

Agent labor is the largest starting expenses for call centers, often accounting for 60-70% of total costs. To optimize labor costs, contact centers need modern Workforce Management (WFM) software that is capable of accurate forecasting and scheduling and agile intraday management. Additionally, organizations should use the remote agent trend as an opportunity to downsize their facilities. And switching to cloud-based call center software can pay off in the long term.

Finding ways to reduce costs in these large expense categories – agent salaries, facilities, and software – will have a favorable impact on CAC and make the business more profitable.