What’s your payback time horizon these days?

I read with interest Larry Dignan’s column on Cisco’s numbers. The salient message is that Cisco CEO John Chambers is not ready to call a bottom in this economy yet. I’m not deeply familiar with Cisco’s numbers and business, but my gut reaction was that their problem is a payback that takes too long. Cisco is all about telecom and Internet infrastructure. That’s deep infrastructure comprising switches and the like, and it takes a while for those big projects to pay out.

Customers these days are starting to invest in things again, but only things that produce a payback very quickly. Long term bets don’t make a lot of sense in this economy. Customers need a return immediately to help accelerate their businesses again.

So how long is the payback for various customer service investments you could choose to make? What should your strategy be when evaluating those investments?

First, let’s look at the investment goals. At Helpstream, we hear a lot of customers talking about needs that fall into these categories:

• Doing more with less: Whether because of layoffs or hiring freezes, our customers have to do more with less in this economy. Any investment often has to be small related to the cost of even one new hire. Savings or other ROI need to be much more than the equivalent of one new hire. And the organization needs to be able to do more—they want to do things they couldn’t previously do at all before.
• Making customers happier: Our customer’s customers are often grouchier in these tough times. Each one is worth their weight in gold. It’s so hard to get new customers that businesses realize they have to treat the ones they have especially well.
• Looking to the Web: Customers are increasingly looking to the Web to solve their problems, and not the contact center. The contact center does not enable companies to do more with less, nor does it usually make customers happier. John Ragsdale did a great survey as part of his SSPA efforts that shows graphically the shrink in call center spending from 2008 to 2009. Conversely, online community spending was up at the same time. It isn’t just the economy either, there are demographic trends driving companies to the Web because that’s where their customers want to interact. The newer generation that grew up with the Web expects to be able to do business there and not have to pick up the phone.

With that picture in mind, what should you choose to invest your scarce customer service dollars in to achieve results quickly?

At Helpstream, we’re focused on community-based customer service. That’s what we know, so that’s what I’ll talk about in the context of our three investment goals and cast against the backdrop of achieving rapid results.

The “Webbiness” factor of an online community is undeniable for companies that want to look to the Web. That’s an easy one to knock out, but it is surprising how few of the major vendors in the customer service world have embraced it. I would venture to say the customers are way ahead of the vendors in terms of adoption. As far as we can tell, Helpstream is the only social software company that is focused 100% on customer service. Likewise, none of the major customer service vendors offer community themselves, although we are partnered with Salesforce and Oracle to deliver community for their solutions. Meanwhile, Ragsdale’s numbers show quite an increase in community spending. It’s half what companies are spending on contact center infrastructure. Clearly, customers know something the major vendors have yet to figure out: Community works for customer service.

In terms of doing more with less and making customers happier, community excels. We have customers who will readily testify that Helpstream has halved their trouble ticket case loads while increasing customer satisfaction at the same time. Plus it creates a more fun way of interacting with customers. Happier customer service reps are more productive reps. Just look at the lengths a company like Zappos goes to in order to inject a high level of “Zany Energy” to power their reps through the day.

Our product has the built-in ability to measure ROI. It’s a firsthand look in real time at doing more with less that tells you, “how much more,” and “how much less,” in one integrated report. Customers love it, and we use it as a research microscope to see what changes we can make to our product to bump up the scores. Using this service microscope, we’ve actively verified the claim that customers can halve their case loads while increasing customer satisfaction. For example, we can see that customers who try the community are 5x more likely to go back to community the next time rather than filing a case. Clearly they saw something there they liked.

Getting back to payout, how long does it take for community to pay off, and what does the customer have to do to achieve that pay off?

Good news here as well. Lots of social initiatives report a long slog building their communities. They talk about hiring extra help to seed the community with participants and the dreaded “Rule of 10s”:

For every 100 who join the community, one will start a thread, 10 will comment on it, and the rest will just watch passively.

At Helpstream, we don’t see the Rule of 10s. Rather than 1%, our engagement rates range from lows of 3% to highs of as much as 12%. What’s going on here?

We like to talk about customer service as being the “on ramp” that builds your company’s community. Getting customers to participate is all about delivering value, and a well-implemented instance of Helpstream does that in spades for customer service.

Because customers are so much happier, because we build their engagement so much faster, payout times for Helpstream are very short. Most customers are achieving immediate tangible results along the lines of halving their case loads in just 2 to 3 months.

That’s a customer service payback worth investing in during these hard times!