Hidden costs are like the fine print in a legal document – they’re not in plain sight but they will affect you down the road.
The problem is they have a negative impact on your bottom line. This is serious stuff.
Of course, there may be extra costs across all areas of your business, but in this blog, I’ll focus on the costs of a customer support and success 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.
So it makes sense to invest in customer support and success.
Therefore, you want to have a very complete picture of the costs involved for each. That’s what I’m here for!
Salaries
Let’s begin with the basic costs one would consider for an in-house team of reps: salaries.
The average salary in the United States for a Customer Service Representative is $30,688 and the average for a Customer Service Manager is $39,694 a year.
Customer success is more complex than support and costs way more. The average salary of a Customer Success Rep is $70,179 a year and the Manager is $81,414 a year.
That’s a lot of money and we haven’t even started with the hidden costs!
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 Tax6% | $1,841 | $2,381 | $4,210 | $4,884 |
| Medicare1.75% | $537 | $694 | $1,228 | $1,424 |
| Workers Comp 1.25% | $383 | $496 | $877 | $1,017 |
| TOTAL | $4,633 | $6,032 | $10,666 | $12,372 |
Hiring, Training and Managing
If you’re hiring, you must go through a sometimes lengthy process that involves time and money. Advertising the position, paying for background checks and other similar costs may seem minimal but they add up.
According to the Society for Human Resource Management, the average cost-per-hire is $4,129, and it takes 42 days to fill a given position. That’s a lot of time and money!
A customer service rep will then need three months of onboarding and even more to be fully productive. After this, bear in mind that employee churn in this space is high and it costs a significant amount to replace a rep. Ouch!
Now imagine investing all of those resources into something else, while letting an outsourced managed service company take care of all this for you. You could save a lot of time and money.
Other Indirect Costs
Office space costs companies around $12,000 per employee. Now add all the stuff you must have in an office – desks, chairs, computers, phones, internet connection, utilities, maintenance, cleaning and coffee.
Customer service and success also require specialized technology – CRMs, call center technology, chatbot apps, and more.
The cost of a CRM, for instance, varies a lot depending on the software you use, your region, optional features and more – but they’re usually billed monthly per user, ranging from $9/month up to $300/month.
A detailed estimate of all the indirect costs will depend on your region and, of course, your particular needs, but you get the picture. It’s expensive!
Counting the Costs
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.
Looking to improve your customer success and NPS?
