Over the past 30 years, cost accounting in software companies has always been a troubling issue. In the turmoil of the startup process, finding the “bandwidth” to do accurate collection and assessment of cost data is understandably difficult. Unfortunately, this lack at the beginning has tended to set a pattern that perpetuates itself. How much are we spending to acquire customers? There is no generally established and accepted methodology for determining customer acquisition costs, nor for how often the process should be done. As a result, few companies can accurately say how much it cost them to acquire a given customer. The effect of fuzzy acquisition cost data is compounded by the near-total lack of any authentic methodology or process for measuring actual retention costs. While there is enough revenue data so that successful companies have a view of their profitability, the lack of a solid cost foundation reduces effective decision-making to “guesstimation” when it comes to retention issues.
The profits-realization strategy of traditional software companies tends to obscure the lack of authentic cost data by the large bursts of profit infusions from new sales. The connection between retention and long-term profitability is given much less emphasis. For SaaS companies, however, the importance of customer retention is sharply increased, and the lack of effective cost accounting methodologies and intervals is a serious threat to long-term corporate viability.
There have been some good articles on the variables to consider in calculating customer acquisition costs for SaaS companies, and on the importance of doing so both regularly and by customer. Joel York’s 
A company’s customer contact center is the vital bridge between the corporation and the customer base. Communications, knowledge, and opportunities move across it every hour of the day. Properly chartered, built and equipped for the load, the contact center is the decisive point in the company’s strategy for long-term prosperity and market leadership.
As with any bridge, the foundation and design of the approaches and exits are crucial to the smooth flow of traffic. Structural and/or operational obstructions and weaknesses can turn what was meant to encourage into a bottleneck. Blocked or discouraged, customers are turned away to seek alternative routes or even to the competition.
The Reality of Change
No customer contact center is static; change is necessarily a reality that must be confronted on an ongoing basis. What was effective, appropriate and cutting-edge today will be obsolete in a year. Shifts occur outside from the market-fostered expectations of the customer base as well as from inside the company. Every technology product inherently carries a support burden, and each new release alters the picture, often significantly. Unexamined tactical decisions about the operation of the center subtly become policy and their impact spreads. Strategic choices made on senior levels have powerful and often unintended impacts on the effectiveness of the contact center and its people.
A Foundation for Effective Decision-Making
The purpose of a Contact Center Assessment / Review is to fully define the Current-State of a company’s customer contact center’s strategy, process, structure/people and technology suite. While focused primarily on the center itself, the scope of the research and analysis is company-wide. The depth and duration of the engagement can vary considerably, depending upon the client’s priorities. At the end of the process, a detailed oral presentation of our findings and specific recommendations is delivered for the company’s Senior Management team. A written Report is submitted, together with high-level options for implementation.
For more information about what a contact center assessment could do for your company, please join us for a complimentary Office Hours discussion. Examples of Contact Center Assessment case studies may be accessed through the following links: (Free registration as a member and log-in is required for access.)
Revised: August 3, 2010