The FT Word – June 2002

By Technical Support

The FT Word

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Welcome to the June 2002 edition of the FT Word. In this month’s issue:

·         Can surveys actually make customers happier?

·         The real cost of turnover

·         Special prices for summer reading

Surveys and Customer Satisfaction

I was most surprised, and pleasantly so, to find one of my more harebrained theories not only discussed but confirmed by serious academics in the May issue of the Harvard Business Review.

The researchers looked at customers of a financial services organization and tracked two groups, one that was not surveyed and one that received a short phone survey on their satisfaction with various features of the service. A year later, the customers who had been surveyed were much happier under all kinds of tangible measurements such as not having defected, having opened new accounts, and having been much more profitable to the company.

The researchers attribute the change to the psychological need to be coddled as well as the awareness raising inherent in the survey.

Being serious academics, the researchers are very cautious to extend the validity of their study to any other field, but you may want to use their result to finally get started with a customer satisfaction survey!

Reference: Paul Dholakia and Vicki Morwitz: How Surveys Influence Customers, HBR 5/2002

How much does turnover cost?

Last month, we talked about acceptable turnover rates, making sweeping statements about turnover being expensive. But how expensive is it really? After all, people who’ve been on the job a long time tend to earn more money than newbies, so isn’t retention expensive too?

This month, we look at the cost of turnover.

What should you consider?

·         direct recruiting costs

·         recruiting fees: any out-of-pocket fees for advertising, recruiter fees, and employees’ referral fees. Many large companies compile this information by department so you can use the figure supplied by HR.

·         time spent recruiting: how much is your time worth to the company, per hour? Use your total compensation — salary plus bonus plus benefits — and divide by how many hours you really work (not 40 hours per week, right?) Add up all the hours spent by all the people involved in recruiting (yes, panel interviews are expensive!) And take into account the administrative effort of posting the job, sorting through the resumes, sending “no, thank you” messages, etc.

·         recruiting bonus

·         relocation

·         legal costs for visa and immigration work

·         training costs

·         tuition fees

·         for in-house training, compensation for the trainers, cost of training rooms and equipment, etc. Don’t forget buddies and other on-the-job trainers.

·         T&E for travel. Don’t forget

·         compensation (to the new hire) during the training period

·        decreased productivity

This is the iceberg! Even with relatively low-complexity products, it can take weeks before a new hire is fully up to speed. So if a fully trained support staffer resolves 10 cases a day and a new staffer resolves 6 per day, the “cost” of the new hire is 40% of his or her compensation.

Add it all up. Many of my clients on the high-complexity support side find that it costs 6 months to a year’s salary to bring on a new hire. The figure should be better (lower) if you work on less-complex support, but you will probably be surprised on how large it is. Hanging on to employees is a great money-saving technique.

Welcome to the summer reading fest – 50% off!

It’s a great time to expand your support library with a special discount on all the FT Works booklets:

Buy 2 and get 50% off the second one (the discount applies to the cheaper booklet). There are six to choose from.

  • The 10 Commandments of Support Pricing ($40)

  • 20+ Ways to Cut Support Costs ($40)

  • Best Practices for Support Metrics ($40)

  • Best Practices for Self-Service ($40)

  • The Complete Guide to Hiring Great Support Reps ($200)

  • The Complete Guide to Hiring Great Support Managers ($200)

To order, click here. Special pricing is available to newsletter subscribers only and ends on 7/31, just in time to take your favorite booklets on vacation.

FT Works in the News

I’m delighted to announce that Prentice Hall has signed me up for a second book. Just Enough CRM focuses on selecting and implementing CRM systems and should hit stores in early 2003. If you have anecdotes to contribute on what to do or not do when implementing CRM systems, please send them my way and you may enjoy your name in print (or I can keep you comfortably anonymous, your choice).

SupportWeek published an article I wrote entitled Making $$ with Support that discusses pricing techniques. You can read it at

And finally: later this month I will be presenting to a group of Korean executives expanding into the US market (about how to do support right, what else?). My understanding is that the presentation will be available from their web site so I will pass on the URL to you when it’s ready.

Curious about something? Send me your suggestions for topics and your name will appear in future newsletters. I’m thinking of doing a compilation of “tips and tricks about support metrics” in the coming months so if you have favorites, horror stories, or questions about metrics, please don’t be shy.

Françoise Tourniaire
FT Works
650 559 9826

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