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The True Costs of an In-House Customer Service Team

Customer support and success are key to your company’s survival and growth, otherwise you wouldn’t retain any of your customers. Research shows that it costs 5X more to obtain a new client than to keep an existing one.

Of course, there may be extra costs across all areas of your business, but in this blog, we’ll focus on the costs of a customer support and success team.

Here are the major expenses - besides pay - to consider when calculating the full cost of providing customer service in-house.

Hiring, Training and Managing  

To provide great customer support, you obviously want to hire great and motivated agents. You have to consider the cost and time spent in identifying, interviewing and recruiting this talent. You may need to dedicate a part of your human resources team to manage this.

In short, talent acquisition can rack up a size-able bill even before the agents step foot in your company. Furthermore, the customer service industry typically has very high employee turnover. Every agent lost is a cost.

This can be a particular challenge for startups and growth companies. Often, early-stage companies are often based in metro areas because that’s where the tech, marketing and design talent is. But often that isn’t where the customer service talent is and errors in hiring can be a costly mistake

As a result, when you want to scale your service team, you may quickly find yourself thinking about recruiting in different states or even overseas. That adds to expenses, and is probably not your HR team's expertise.

Inefficient Staffing Costs 

Inefficient staffing and scheduling can be a huge hidden cost. If your agents are idle for hours each day, you’re wasting money. But you need to ensure you have enough coverage at peak times.

Companies that have inefficient staffing could be (a) providing sub-par service because they're understaffed at key times and/or (b) actually hiring more agents than they actually need.

Outsourcing companies rely on their expertise to get the right shift schedule for each company. Using our queuing model, for example, CloudTask can determine the precise number of agents required for each shift, based on your desired response time and constraints.

In short, many factors add to the cost of operating a customer service team, not to mention the cost of management’s effort and time involved to make it work. With an outsourcing firm, companies can typically save money and get a single, foreseeable expense, while each of their customers get top-notch customer support. Hence why many companies are turning towards outsourcing their staffing.

Office Space

If you’re hiring in-house, you need office space, desks or workstations, headsets, phones, computers, and more. The real estate alone costs alone can be prohibitive, particularly for smaller companies.

Monthly rent for urban office space ranges from $1.74 per square foot in Atlanta to $6.16 in New York. You probably want a minimum of 100 square feet per person, which means office space for one customer service agent could run you more than $7,000 per year.

Furthermore, you may need to plan for potential growth of the customer service team, and take up office space accordingly.

Employee Benefits

As an employer who wants to attract the best talent, you must offer non-wage compensation to your in-house team of customer service/success reps.

These benefits may include health, dental, and life insurance, disability income protection, retirement plan benefits (pension, 401(k), 403(b)); daycare expenses; tuition reimbursement; sick leave; vacation (paid and unpaid); social security; profit sharing; and student loan contributions among others.

 Many of these are not mandatory, and only some companies can afford to provide them. However, there are other mandatory benefits that you must provide by law. The table below shows calculations for some possible extras for each position based on the average salaries mentioned above.

	Customer Service Rep $30,688/year	Customer Service Manager $39,694/year	Customer Success Rep $70,179/year	Customer Success Manager $81,414/year
Social Security 6.2%	$1,902	$2,461	$4,351	$5,047
Employment Tax 6%	$1,841	$2,381	$4,210	$4,884
Medicare 1.75%	$537	$694	$1,228	$1,424
Workers Comp 1.25%	$383	$496	$877	$1,017
TOTAL	$4,633	$6,032	$10,666	$12,372

Doing the Math

Are you prepared to cover all the costs above on an on-going basis?

Perhaps you should consider outsourcing customer service? Not just because you save time and money, but because you want to increase your customer satisfaction and retention with the help of trained teams of experts.