We've all heard that great customer support is one key to success in business, but sometimes it's difficult to measure it's effect on revenue growth. Well, over the last couple of months I've witnessed an interesting by-product to hiring a team member to help with customer support... noticeable revenue growth!
On June 1st, 2010, Jon Cochran and I launched QuoteRobot, an app that helps designers and coders create winning proposals quickly. It's been a lot of work, and we've been lucky to see steady growth ever since our launch. I wrote another post about how much fun it is to create residual income with an app - it's a lot of fun.
One of the things that's also grown has been the amount of customer support emails we receive. With our day jobs (Jon and I both actively design and code for a living) we'd been falling behind this year on the day to day support and bug fixing end of things. We decided to hire an additional team member in April 2011, and hired an excellent guy named Randy Jennings.
Fewer Cancelations = More Revenue
Like any web 2.0 startup founders, we measure everything religiously. Visitors, signups, retention rates, click through rates, etc. We keep our fingers on the pulse of the business. Watching the numbers is one of the joys of startup life.
Our cancelation rate for new signups has always hovered around 50%. That meant that for every ten people who put in their credit card to use QuoteRobot, five would quit. It became a sort of the rule of thumb we'd use to estimate our future revenue growth.
Since Randy's been tackling the customer support, we've seen a major decrease in cancelations. So major in fact, that our cancelations are down 40%. That's right, 40% fewer people are canceling now that we have somebody answering emails immediately upon arrival! We had no idea this would make such a difference! I feel naive for not getting on it sooner.
Here's a little graph I made to show the difference it's made.
A graph showing the percent of users who cancelled after 30 days in 2011.
We started out the year with an abnormally high cancelation rate. Some bugs emerged during our Christmas hacking sessions that we didn't squash in time, and people are generally more inclined to clean up their credit card bills early in the new year. Then in March, we fixed a bunch of bugs and promoted the changes, so we saw a dip in cancelations, but April brought them back up to the average. Then, we beefed up our customer support, and we've seen what appears to be a sustainable drop in cancelations!
Based on our average cancelation rate of 50% last year, we've seen a 40% drop in cancelations over the last couple of months. Pretty awesome! Talk about some great motivation to continue helping people create winning proposals.
If you liked this article and want more, please consider tweeting about it, sharing it, or just following me on Twitter (upper right). Thanks a bunch for reading.