What Does In-House Customer Service Cost for E-Commerce Companies?

Retail and e-commerce companies who want to offer quality customer service face a choice: manage it in-house, or outsource to a customer support specialist?

Costs are a critical factor in making this decision. But many companies consider salary and benefit costs alone. In reality, building a support team in-house involves a number of hidden costs including recruiting, training, infrastructure, and inefficient scheduling. All these add up to a hefty sum for a function that may not be core to the business.

In comparison, outsourcing services firms consolidate these costs into a single, predictable expense, which typically works out to be lower, while also providing access to experienced customer service professionals.

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

Hiring Costs

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.

If your retail or e-commerce company is based in a metropolitan area, often that isn’t where the customer service talent is.  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.

Outsourcing specialists, by contrast, have a competitive advantage that makes it cheaper to recruit customer service agents. At Peak Support, for example, we continually engage with top talent in the industry, and can easily bring on new people when clients require it. Our website attracts thousands of visitors looking for customer service jobs. And we get frequent referrals from our existing agents.

Training Costs

Poorly trained customer support staff can misrepresent your brand, and can cost you money. It’s imperative to create a training program in which the agents are taught not only the ins-and-outs of the product they will be servicing, but also, the company’s core values and policies, customer service best practices, and more. Training programs have to be periodically updated as the company evolves.

The time and money invested in creating these training programs is non-refundable. In comparison, customer service outsourcing firms can rely on their experience to create appropriate training modules quickly and efficiently. Plus, training programs are continually updated to keep up with latest industry trends and for compliance with changing regulations.

See how a cult clothing brand and e-commerce company found a strategic customer support partner that helped them scale. 

Infrastructure Costs

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.

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, Peak Support 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.

If you want to learn how a cult fashion brand and e-commerce company found a strategic customer support partner that helped them scale, read the Public Rec case study below.