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How To Measure The Cost Benefit Of Social Media Customer Service

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Measuring the ROI (Return on Investment) of social media has long been a challenge for marketers, but customer service should be easier to measure. There are clear comparisons to other servicing channels like phone, email and chat, and no dependence on “vanity metrics” such as likes, shares and comments.

At nearly every company of the dozens interviewed for the book, Winning at Social Customer Care, servicing customers on social media is cheaper than servicing them in other channels, producing a better ROI. The key metric to focus on is Cost Per Resolution.  Most traditional call centers are already measuring this for phone calls, email and chat sessions, so calculating it for social media follows a similar method.

Here are the inputs you’ll need:

  1. The number of hourly or daily inquiries handled in social media
  2. The average resolution time per inquiry
  3. The average hourly rate paid to social media Customer Service agents
  4. The standard overhead expense allocated to hourly workers in the call center (this accounts for fixed expenses like rent, utilities, and amortization of equipment)
  5. The percentage of an agent’s shift that is considered “downtime”

To calculate Cost Per Resolution, start by adding the average hourly rate of an agent and the standard hourly overhead expense, then multiplying by the percentage of time allocated to social media Customer Service. For example, if an agent is 60% dedicated to social media customer service, then simply multiply by 60%.

Next, divide the resulting number by the average number of social media customer resolutions in an hour. Note that the number of hourly customer resolutions need not be a whole number; that’s why the average resolution time (No. 2 above) is important. So if the average resolution time is 25 minutes, then the average number of social media customer resolutions in an hour would be (60 min/25 min = 2.4 customers). This helps account for the fact that unlike telephone calls, social interactions can sometimes span hours or even days, due to waiting for the customer to respond. This makes it very difficult to measure “actual” time per discreet customer interaction.

So the mathematical equation of Cost Per Resolution will result in a dollar amount as follows:

.

If an agent has “down time” during an hour, it should be allocated to each channel based on the percentage of time spent on that channel. For example:

Suzanne is a Customer Service agent who spends an average of 60% of each hour handling social media inquiries. When there are no inquiries to handle, she fills most of the remaining time (30% of her total) answering customer emails. Approximately 10% of her time is considered “downtime” – coffee breaks, team meetings, and other non-working activities. When calculating Suzanne’s percentage of time allocated to social media Customer Service, we should start with the 60% and then add social media’s portion of her downtime, which in this case would be 6% (60% of 10%), to get 66% total.

After calculating a Cost Per Resolution, compare it to other service channels. In most large companies, the other channels require a fairly straightforward calculation because call center agents are consistently busy during the day – in other words, there is very little downtime, and most agents are not splitting time across service channels.

What does this cost comparison look like? Twitter has reported that service on Twitter could cost as little as 1/6 of a phone call, though other comparisons are closer to 1/3. Either way, it is significantly cheaper, which emphasizes the importance of reporting its true cost to management especially as customer care volume in social media continues to rise.

It is important to have your finance department validate all of these assumptions and calculations so the result can be used to request more resources and report on success.

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