The $10,000 Escalation

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Let’s start by acknowledging that the support field uses the word escalation to mean two things:

  • out-of-organization handoffs (as in, I need a bug fix and I need someone in the Engineering team to create one)
  • out-of-process situations (as in, the customer is yelling at the sales rep to get the issue resolved, already)

I insist on using the word escalation only for the latter, but it’s your lucky day: this post discusses both.

You may be surprised, indeed entirely unconvinced  that escalations can cost $10,000, but let’s inventory the costs:

  • Costs to get to a technical resolution: the time of the support engineer who owns the case, the time of the subject-matter experts that may need to assist, time from the Engineering team to help troubleshoot the issue, time to create and test a bug fix, and push it out.
  • Costs to handle the political and business aspects of the situation (true escalations always have business costs, and handoffs may as well): the time of a dedicated escalation manager, time from the sales rep and CSM, and perhaps time from various executives to appease the customer.
  • Costs of the long-term consequences of the escalation such as outright churn, lost expansion potential, the withdrawal of the customer as a positive reference and negative feedback within the customer community. I will leave this category of costs out of the computation completely because it’s squishier, but it can be very significant.

Let’s talk numbers. If the average case costs $200 (assuming 2 hours of effort time from the support engineer in a reasonably high-complexity support environment), the technical resolution of an escalation could cost:

  • $1000 for the support engineer (it’s now 10 hours of effort instead of 2)
  • $300 for the subject-matter experts (2 hours, and SMEs are paid more than regular support engineers)
  • $400 for 2 hours of development engineers’ troubleshooting assistance (they are paid even more)
  • $2,000 for 10 hours of bug fixing and testing
  • $300 for release management’s packaging of the fix (2 hours)

That’s $4,000 for the technical resolution cost alone, 20 times more than a regular case! Let’s add up the business costs:

  • $2000 for 10 hours of an escalation manager’s time
  • $500 for an hour of the support VP’s time
  • $200 for an hour of the sales rep’s time
  • $750 for 5 hours of the CSM’s time
  • $1,000 for 2 hours of other, non-support execs’ time

That’s $4,450 for business costs, for a total of $8,450. Awfully close to $10k, right?  And it does not include long-term negative consequences on revenue.

The business costs add up fast for uncontrolled, reactive escalations.

  • How much do your escalations cost?
  • What are you doing to detect potential escalations before they get too ugly? Reviewing cases manually? Using AI to predict them?

Add your experience to the comments.

2 Comments on “The $10,000 Escalation”

  1. You know this is one of my favourite topics! Escalations, 10-12 every day. So can I even share publicly how much we think on of ours costs? I think i’ll say that the last time we looked a few years ago properly at costs per escalation we found a rough amount of more than 500 bucks a day and less than a 1000. Note that these are more along the lines of your second bullet, i.e. not a bug. These days we have a more even balance of bugs like in your first bullet, that fall into the greater escalation bucket. I will be getting a more accurate feed on costs very soon, on a routine basis. As for heading things off proactively we’ve done some work on that just recently and I may share on that when I can tell our countermeasures are working as planned. And yes, there is a touch of AI involved 🙂

    • Thanks Justin. I know that sharing numbers is tricky and I appreciate your openness!