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Support is a cost center

Brian Levine's Profile Picture

Brian Levine

Co-Founder, CEO

Expected vs Actual

Support is a cost center.

There. I said it. I said the bad thing.

Support Professionals often complain that their company leadership sees their team as a cost center. Why is that a problem?

We have developed a stigma around the idea of "cost centers." We see them as money pits, and the best way to deal with those are to seal up the pit.

I want us to reframe our thinking: let's say support is a cost center. How can we use that status and what does it do for us?

Definitions

First, let's define some terms. Here's how I learned and came to understand the concepts of a "profit center" and a "cost center" many years ago.

A "profit center" is a division of the company that is directly responsible for generating revenue. When looking at that division's balance sheet every quarter, there is a line for profits and a line for expenses. When the profits are greater than the expenses, the company makes money. The Sales team is the classic example.

A "cost center" is a division that does not have a profit line on their balance sheet. They have expenses, but not incoming revenue. Some good examples of a cost center are your internal operations teams. Human resources and finance are also classics.

That's it. A simple accounting demarcation. When looking at most companies, it's fairly easy to see which teams are profit centers and which are cost centers.

Where the stigma comes from

However, it seems like much more than a simple matter of definitions when talking to my support friends. Profit centers are able to generate money for the company. And with that comes a lot of flexibility. If they want to try some new program that requires hiring some staff, they can afford to do that by bringing in some money somewhere else. Cost centers, on the other hand, are often given a budget and told to do the best they can. And those budgets seem to get smaller and smaller every year.

That feels like an unbalanced, two-tiered system. It feels like a system where some teams matter and some teams don't. As a result, nearly everybody I talk to in Support is looking for a way to change that framing. They want to avoid being seen as a cost center, with all of the negativity that implies. They want their company leadership to see Support as a profit center.

Instead of trying to contort our support operations to look more like profit centers, we should take on more of the responsibility that comes with being a cost center. In the end, I think that's better for everyone.

To do that, though, we need to take a serious look at what it means to run a support operation

What we talk about when we talk about support

Nearly every support team I've ever seen or talked to or heard about has the same goal. And that goal is NOT

  • To reduce the Support expenditures to zero.
  • To increase NPS to some specified number.
  • To reach a specific CSAT score every quarter.
  • To solve all of the customers' problems immediately every time.

Those might be useful ways to see if you're achieving your goal, but those are not primary goals in and of themselves.

In general, the goal of a support team is to provide the best support possible for the least amount of money.

Another way to frame this is that as the support leader, your job consists of maximizing the team's effectiveness while minimizing the team's budget.

"Minimize" does not mean "reduce to zero" here. It only means that if the first point ("maximize effectiveness") doesn't exist. But since that first point does exist, "minimize" has a limit. It's not something we can do in isolation, but is one half of a two-part job that requires a lot of balancing. To do this, you need to know where you're spending money and how that is impacting the team and the service they provide to customers and to the company.

I am being deliberately vague in these definitions. You need to determine what "best support" means and how you judge your team's effectiveness. When setting quarterly or annual goals for the team, you want to be more specific than "everyone do the best they can."

As leaders, we often fail here by letting our executive teams define this for us, or by relying on "industry standards and benchmarks" to do that work for us. This is an area where you need to put in some effort in order to not be seen as a money pit.

And I think this is the part where most of us drop the ball and conversations about "cost centers" quickly turn into conversations about money pits.

That pit is a swimming pool

Support is only a money pit if you don't know what you're spending your budget on. When you haven't clearly defined the value of your team, and then communicated that to the rest of the company, then it isn't clear what leadership is getting for the money they're spending.

To do this well, you need to know what "good support" and "great support" and "the best support" look like for your company, your products, and your customers. Don't rely solely on industry benchmarks or rules of thumb or best practices. Talk to your customers and try to understand what problems your products solve for them and how they want to be supported in using those products.

There are a lot of decisions you make that impact the quality of support you offer and the cost of providing that level of support. Some things you may want to ask include:

  • How many support channels do you have and what are they? Phone support is more expensive than a community forum. Email support might be cheaper than chat support for you. You'll need to know how many people to staff per channel and what the general workload is for it.
  • What is Support's availability? It's more expensive to offer 24/7 coverage than only responding during business hours. You'll need to know what your customers will expect and what they'll be willing to compromise on. What level of service will you provide? You can increase staff to enable high-touch, dedicated support for each of your customers, but you'll need to know what that costs and whether it's worth the money for you and your customers. You want to know if that kind of service is expected or even necessary.
  • How much documentation can you provide for customers to self-serve? Providing documentation isn't free either. Docs need to get written and updated frequently. It may be worth staffing a dedicated technical writing team in order to deflect a percentage of tickets to customer-facing docs rather than have people contacting support as a first step to get help. Most products have some form of docs available, but you'll need to determine how to do that within budget.
  • What tools are you providing your team? Usually this refers to the software the team uses - help desks, primarily, but also other applications the team might use to investigate and resolve issues. This can also include hardware, depending on the product you're supporting. You need to know what your team needs to do the job effectively and balance that with your budget just like you would with headcount or anything else. This is an area where execs try to save money early on while inadvertently slowing down the team. It may look like you can save a few thousand dollars a month by not getting some software for the team, but you can lose more than that in time wasted or in extra staff needed. Be careful with what you're trying to cut out and how that impacts people's day-to-day work.

The purpose of all of this is to think about support as a strategic set of deicisions that balance multiple competing priorities. You can provide 24/7/365 phone support with a dedicated support engineer for every customer if you have endless amounts of money to spend on hiring and training. But is that the best use of your budget?

That might seem like an extreme example, but we make similar trade-offs all the time without putting much thought into them. If you've gone through the exercise of determining what good/great/best support looks like and what it would take to provide it, you can have more meaningful discussions around how to budget for your team. Instead of hearing "we have to cut the support budget by 5%" and throwing up your hands in frustration, you can come back with a plan. "We can reduce staff by 5%, but that means we'll need to reduce our available hours. If we aren't willing to make those concessions, here's a possible compromise."

Directions

I didn't give a lot of answers here. As I said in the beginning, the goal is to reframe our thinking. The details of your operations are an exercise left for the reader, as they say.

Support is, in fact, a cost center. There's a lot of stigma associated with being a cost center, but I think a lot of that stigma is self-imposed. The way through the pain is not to avoid it and try to convince ourselves that we're a profit center, which leads to a ton of other problems (that I'll probably talk about in a future blog post). No, the way through it is to get better at doing the things we already know we should be doing - learning, planning, and communicating.

A lot of support leaders and support professionals get angry or upset or frustrated when they hear their CEO refer to support as a cost center. Those support leaders and professionals need to clearly define what the company can provide to customers for the budget they're provided. Because if they don't define and communicate the value of support (both monetarily and non-monetarily), then the CEO will make up their own definitions. We can't be mad at them for making up definitions we don't agree with if we aren't filling in those gaps for them.

It's okay to be a cost center. Be the best cost center you can be.

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