Minimum wage increases are a hot topic across the country: New York, Washington, Michigan, are just a few of the localities taking legislative steps to pay their residents a fairer wage. While it is an exciting time for entry-level and lower-wage workers, businesses in these areas are being thrown into a bit of a panic. How do you find an immediate solution to make up the cost difference?
Additionally, six in 10 Americans feel justified in expecting better service with a wage spike. So, businesses are under added pressure to deliver higher quality service with fewer resources. Since customer service representatives are traditionally paid a base wage and are also on the frontlines with customers every day, they are an integral piece of this scenario.
A Perfect Storm Scenario
A common first resort for businesses is to cut employee benefits. This might be a fast road to cost saving, but it is also the highway to turnover. Cutting benefits means unhappy employees, lower retention, and fewer job applications. The result is a series of events that business simply cannot afford; turnover can cost between 30 percent and 150 percent of an employee's annual salary. Especially on the customer service side, how can you expect your company to uphold a strong voice and quality service if the staff serving customer needs and complaints has a revolving door?
A minimum wage increase can seem like the perfect storm, with companies ultimately not only spending more on wages, but also on additional efforts to attract and retain employees. But this does not have to be the case. To avoid the perfect storm and foster a more ideal event sequence, you simply need a strategy. Begin by recognizing the value of your entry-level employees and, in particular, your customer service staff.
Customer service is a competitive space, with many businesses vying for a similar pool of applicants. You always want be the most appealing employer in the area, and this begins with valuing your employees for what they are worth. Below are three tips to consider when formulating your strategy:
- Stay Above the Minimum: Say the minimum wage has been increased to $13 per hour in your area. One approach your company can take is to offer a bit more than $13 to entry-level employees. It sounds counter-intuitive: wages are already costing the company due to the required wage increase, how can you afford to put even more money into salaries? Meeting the minimum wage makes you no different from any other employer in the area, and cutting benefits makes you even less attractive. By putting your people first and offering a higher wage and retaining benefits, you are differentiating your business offering. Yes, it is expensive, however it likely will cost less than the recruiting and training costs that come along with employee turnover.
- Use Technology Where Lucrative: While your people are very much worth the investment, we live at a time of technological advancement and automation. It is possible to employ technology for mundane activities. But it is also essential to identify where technology can help and where it will hinder. Data can be a North Star in this area. A recent survey from Arvato found that 49 percent of people do not want to be served by a chatbot, however 31 percent want more automatic call backs and 28 percent want more real-time order updates. In other words, customers today are still willing to hop on the phone for their service needs, but they are looking to you to be proactive. Use technology to offer them convenience, and then empower your customer service staff with more complex duties. Your business will be more efficient, and your people will grow.
- Partner with an Outsourcer: Teaming up with a customer service outsourcer allows the unique opportunity to share costs and save money. You do not have to use internal resources to train, recruit, and staff. With an outsourcer, a fixed cost can be established and your company can make an affordable investment in reliable, top-notch service for your customers. Additionally, technological implementation considerations are taken off your plate and, should the minimum wage increase in your city, the outsourcer is not necessarily affected.
Your company is responsible for having a sound strategy to maintain quality service even in the event of a legislative change. A successful strategy will recognize the value in the customer service team, providing the wage that employees are worth and the benefits they deserve. It will determine where technology can be used to eliminate the mundane and empower employees with greater responsibilities. Otherwise, it will lean on an outsourcer to instill these values and keep costs low.
Fara Haron is CEO of Global BPS at Arvato.