Reinventing Startup Customer Support

I’m excited to invite our second guest contributor! Shannon Burch is Vice President of Experience with Neo Financial, focused on disrupting the banking experience for Canadians. Shannon has leveraged her expertise in bringing together people, technology, and operations to create systems that have enhanced process efficiency, reduced interaction volume, increased workforce productivity while driving growth and profitability for Neo. Throughout her career, she has excelled in leadership roles across sales, operations, wealth management, and customer experience at leading financial institutions ATB Financial, Scotiabank, and CIBC.

Thanks Shannon for sharing your experience in building world class customer support experiences and how startups should be building their own customer support teams at each stage to help customers and improve profitability!

Do you know what blows my mind? Despite research showing customer experience impacts profitability, most startups only think of customer support centers as cost centers.

When I traded in my tailored suits for some comfy jeans and sneakers to join Neo Financial, Canada’s fastest growing Fintech, I saw an opportunity to change the mindset. I jumped in to design a customer focused operating model, grounded in building brand loyalty and profitable customer relationships. And the starting point was Customer Support, otherwise known as Contact Centre, Customer Care Teams, or Customer Experience Teams, when a customer interacts with a human to solve a problem or ask a question.

I am in awe of founders who build innovative, customer centric products. Yet they miss the connection between customer support and profitability. Most humbly admit they did not see that connection. That makes sense as founders are consumed by decisions around capital utilization and revenue growth. Direct attribution of customer experience to bottom-line growth is not easy to prove, thus difficult to invest in.

I therefore set out on a mission to talk to founders and introduce the idea of profitability in their customer contact center, something I wish to talk about to you now!

The Missed Connection

Most startups’ products take center stage while human support often takes a backseat. A company doesn’t grow without innovative products and customer acquisition. That said there is no rule that says you must choose acquisition over support. Support is in fact an extension of acquisition, resulting in quicker payback of acquisition costs, turning unprofitable customers into profitable ones.

There is a direct correlation between a founder’s personal experience with customer support and its priority in an organization. The lack of customer experience fundamentals and the connection between friction, problem resolution, and trust is often missed. Establishing trust creates loyalty and loyal customers are over 80% more profitable than indifferent ones.

The Profitability Equation

There is a correlation between problem resolution and building trust. Trust is foundational for customers who choose a brand repeatedly. Why do you think customers use traditional banks? They trust them! A new brand doesn’t have that, they must work to earn it.

At Neo, the interaction types that customer support deals with are sorted into three cohorts:

• Acquisition: In FinTech’s, this is all about application flow and adjudication rules. Helping someone through the approval process adds to customer acquisition costs (CAC). However, if the customer abandons the application, the return on the investment instantly falls to zero.

• Value Add: Communicating new products or additional features during support calls create further understanding and engagement between customers and product.

• Retention: If a customer communicates they want to stop using your product or experience frustration, customer support is the last line of defense. They can reframe the value proposition and restore trust so customers stay loyal to the product.

All that being said, how do I know that investing time and money in creating profit generating customer experience is worth it?

Research confirms the critical impact that customer support plays in customer experience, loyalty, and long-term customer value. Qualtrics 2024 Consumer Trends Report reports 61% of customers buy based on product quality and 47% based on customer experience. Price came in third at 41%. According to Forrester, companies who focus on customer experience outperform their peers by as much as 80%. Customers value companies with good customer support. That value turns into loyalty resulting in customers buying more.

From day one, I designed the customer interaction model at Neo to ensure that brand loyalty, value creation, and retention were our foundation. That foundation has stayed consistent as the complexity of customer needs increased with new products and services. 

The Blueprint for Success

How can you harness the power of customer experience to propel your startup’s rapid growth? Let's break it down by stage of startup maturity!

Stage One: Launch / Pre-Seed - When customers begin to engage

• Build a dedicated “Customer Experience” team. I suggest this name because it emphasizes the importance of experience around the customer. Stay away from calling the team “operations” as operations teams are always considered cost centers and it sets the wrong culture internally.

• Volumes will be low, even if your customer interaction rate is high. Use this time to establish the team structure, a simple tech stack, and the necessary processes to run the team efficiently when growth and call volume picks up later.

• Start with one channel, preferably voice. It is the easiest to stand up and best way to learn from customers. In many countries, customer interactions are required to be recorded and archived. It’s also a best practice as these records are a valuable data source. Ensure you choose a Contact Center partner with the functionality to save interactions and pull insights from the data. For example, Amazon Connect has a full suite of tools to assist with this.

• Avoid email. Customers use email because they believe the problem is solved as soon as the email is sent. They do not feel the same days later across back and forth emails till their issue is finally solved. Most issues can be solved over a call in under 10 minutes, which ensures customers actively use the product and generate revenue, instead of growing frustrated waiting for a resolution.

• Build a framework for interactions which underpins onboarding, coaching, and quality scoring. A framework defines key elements of interactions and how interactions progress to resolution. At Neo, we use an acronym that makes it easy to recall these elements through the interaction journey, such as using the customer’s name, authenticating the customer, summarizing the call, etc. This removes the need for detailed scripts for agents to follow. Instead, the framework gives an agent the flexibility to resolve the issue while building trust and value with customers.

• Use the creation of the framework as a way to collaborate across product, brand, and marketing and align the framework’s elements with product and marketing.

• To minimize the cost of support, keep hours of service as short as possible. Increasing hours is significantly easier than reducing them. Start to build self-service tools like help center articles or FAQs to help customers when live support is not available.

• Create metrics for quality of experience, costs, and revenue generation. At Neo, agents receive a quality score for interactions each week. The metrics are still quite basic and include cost per call, hold time, percentage of calls on hold, etc.

Stage Two: Growth / Series A - As complexity and volume of interactions increase

• The framework from Stage One will serve you well in this stage as growth is on fire and the customer support team is struggling to keep up.

• Growth is accelerating, volume forecasts become ineffective, and you can’t hire people fast enough while the cost of service escalates. The team is overwhelmed and not able to answer all interactions, leaving some customers frustrated and abandoning the product.

• This is when you optimize the operating model and evolve the elements in your framework to meet this growth stage. The framework built in Stage One is the constant, allowing for change to progress without much disruption.

• At Neo, we optimized the operating model five times in three years. Some changes were more significant than others, but we always transparently set new expectations for the agents, the elements changing in the framework, and new measurements of success.

• Invest in optimizing technology to reduce costs, enhance the agent experience, and capture greater profitability:

  • Skill based routing: Most Interactive Voice Response (IVR) systems can route a call to an agent matching the reason for the call to the skill of the agent. This is what we do at Neo, routing a customer with a question on using the app to a level one agent, whereas a victim of a fraud gets escalated to our most skilled agents.

  • Introduce a chatbot / voicebot: Chatbots are not Plug-n-Play technology, but when built with care and attention to the needs of your customer, they are powerful tools for reducing call volume and creating a real time resolution experience for your customers.

  • Use AI to enhance the agent’s experience: At Neo, we partnered with AWS to find ways to make the agents’ job easier, resulting in their ability to focus on building customer loyalty.

• Enhance the business metrics to balance quality, costs, and profitability. At Neo, we are obsessed over metrics such as cost of acquisition, retention rates, customer profitability with and without customer support, average balance changes post interaction, and product retention and growth after a support interaction. Metrics are also not viewed independently from each other, but collectively to assess the health of the business.

Stage Three: Scaling / Series C - When data allows for customer segmentation

• This is the stage when you can create a customer experience that truly differentiates your startup. Why? Because you will take actions based on deep personalized data of customers.

• Structured data allows for easy extraction of customer journeys and outcomes. That data informs a Generative AI (GenAI) model which helps predict a customer’s propensity to increase their usage or revenue. GenAI unlocks the ability to spend more on servicing a high value customer while reducing cost for unprofitable customers without degrading the experience of your brand.

• Align your highest value customers to an in-house team skilled to acquire, cross-sell and retain customers while unprofitable customers flow to lower cost options that can answer questions accurately and quickly.

It’s at this stage where you can follow a customer’s journey and pinpoint where loyalty increases and unexpected revenue is realized. The value of live human interaction is also easier to attribute to profitability and calculate ROI. The way I calculate ROI is by comparing the profitability of different customer journey cohorts. For example, you could compare three customer journeys:

1. Used product only.

2. Used product plus marketing interaction.

3. Used product plus marketing and customer support interaction.

Calculate the profitability of each cohort over the same time and compare the costs to service that cohort against average customer profitability. With this level of insight, most startups will begin to truly appreciate the entire customer experience lifecycle and see customer support as a profit lever for accelerating growth and increasing market share.

The Bottom Line

Our experience at Neo confirms that designing a customer service strategy for your startup from the very beginning will pay off long-term. A simple, low-cost design gets you started. Even if the data is not available to prove the impact of customer service early on, trust in the process. As your startup grows in complexity and data matures, the customer experience strategy will also evolve to meet the demands of the business.

Every customer interaction is a chance to solve the problem and differentiate your brand. Seize the opportunity to watch your profitability soar and make your investors happy!

Shannon Burch, VP Experience at Neo

One of the questions I sometimes get from startups is about what tools should they use for “X” function. In the early days, you should really minimize the tool usage. Your needs are not going to be extensive and each tool you add to your operations adds more attention needed for the tool itself as well as more cost. Focus on addressing the basic needs first like email, office suite, work stream management, documentation, and customer database.

Eventually though, your needs will grow and in order to scale, you will need tooling to enable your growing team to collaborate and coordinate well, to ensure you can ship product quickly, and to adequately support the needs of your expanding customer base.

How to pick the most appropriate ones for a startup though? My friend and former Antler director, Ollie Forsyth, has been putting together some excellent resources for startups, include a startup tech stack mapping of tools that we are resharing here for you. Find the original post on Ollie’s LinkedIn feed.

Let us know what are your favorite tools, we would love to hear which tools are gaining more attention from startups!

Currently Mark is Singapore and has already had some awesome meetings with founders and others supporting the local startup ecosystem. He will share more next week once this leg wraps up. Next stop? Hong Kong and then Shenzhen to speak at the AWS Community Day event there!

If you want to meet up and ok waking up early on a Saturday morning for some coffee and conversation, I will be speaking at a healthcare / life sciences meetup in Singapore on June 29 at 9:00 AM. You can find the details in this post.

The following week Mark will be back in NYC for the AWS Summit and it will be eventful! If you are located in NYC or plan to be in town the week of July 8th, we absolutely recommend signing up to attend. It is free to join and there will be plenty of new product announcements, demos, workshops, and partners in town to support AWS startup customers.

Basil is heads down working on video content, you should check out his latest MVP Lab video and subscribe! Mark is also working on a new season of his Founder Mistakes video series, this time focused on tech mistakes in startups. If you have not subscribed yet, please do support!