Truly high-growth brands devote attention to both growth and profitability – and optimizing customer support operations is a key to unlocking the latter.
Customer support and customer success get a tough break, especially in direct-to-consumer (DTC) settings. Any additional time spent on a customer after they’ve already made a transactional purchase is “just adding to the cost per sale.” And with that notion already ingrained in teams’ minds, any further spend to enable customer support tends to be fairly low on the list of company priorities.
Compare that to a department in demand generation, which can easily get a budget for whatever they want (with proof or suggestion of results).
This mindset is driven by brands sitting in “Growth” mode for 80% of their life, since, when just launching a business, that’s what it takes to get off the ground. Increased sales means increased budgets, bigger numbers, more brand recognition, and a whole slew of other benefits that positively impact other areas of the business… so that heavy emphasis makes sense. 80% of the time.
But what about the other 20%?
This is where operations roles are typically focused. COOs, Finance Directors, Enablement teams, and ops folks dedicated to departments (like sales or support). Those personnel are focused on resources. And most often, the costly and vital resources are our workforce.
Operations’ efforts are fully dedicated to improving not growth, but “Profitability.”
Profitability is about taking the resources we already have and stretching them. It’s about eliminating waste, all for the sake of increasing operating margins for the company.
But when brands have such special, brilliant, empathetic support team members, eliminating waste, at first glance, sounds a lot like cutting personnel. And that’s both awful and counter-productive. You need those resources to help your customers, and if the customers don’t come back, then… you’re dead!
In cases where we’re looking at a “cost center” – a vital one, mind you, that you can’t eliminate – all leaders can do is make that cost center run more efficiently. That’s way less sexy than seeing the arrow go up and to the right as it does when investing in Growth priorities. But what brands often overlook is this:
The Road to Profitability
Profitability can be achieved in a number of ways, but what’s nice about building profitability in support is that it’s sustainable. After you take measures to redesign support operations, they continue to provide value over time by keeping margins higher than they were without slipping back.
The other way that teams usually build up profitability is by investing in cheaper labor. They’ll add to their headcount by investing in offshore or nearshore resources. Which, by the way, totally works, and also makes a lot of sense for brands with a global presence that need 24/7 coverage.
But we want to look at the underlying process so that both the offshoring teams and the internal teams can benefit from systematic improvements.
Compare that to growth investments, which usually come in the form of campaigns. Unless you have Nike-level brand recognition, consumer-driven purchases come through in bursts: Either they need the product you sell, or they don’t. Either they’re incentivized by the promo you’re running, or you’re not running that promo right now. There’s no better proof of the rise and fall of growth momentum for DTC brands than seasonality and the holiday rush.
So the big question I have for brands is this: if you’re strategizing to make your next transformative growth push – have you looked at profitability lately?
In part two, we’re going to talk about the “how” of achieving Profitability in support (and, to be fair, most other business operations): incorporating automation. What does that look like? What are the risks? And why is paying for more software so damn scary sometimes?