How much does expansion cost: What and how much will you pay for once you're in the market? IV.

Published
10/22/2021
Author
Expandeco
Reading in
12 minute

If you have successfully penetrated a new market, congratulations. And now a helping hand! Only now comes the daily repetitive grunt work that will propel you to success abroad. What activities to focus on? How much will it cost you? How do you decide which option is right for you? This time we focused on the costs related to customer support, how to improve it with a minimum of costs, when to outsource it and when, on the contrary, to build your own team.

Customer service is key, 60% of people are put off by a bad experience Costs

  • At the start, many people hire a local contractor for €300/month, but if you're not lucky, you may scare off other customers.

  • A specialized agency will cost you between 500-1000 euros/month. “An agency’s charges are most often based on volume, where, for example, a well-established online shop that handles around 500 customer conversations per month will pay around €1,000 for outsourcing customer care,” explains Tomáš Vrtík. Expandeco offers a basic service for EUR 300–350 per month within one market, with the package including 50 communications, a local phone number, substitutability and the ability to be available every working day. If the number of communications is more than 50, they are charged at the list price of approx. EUR 1.30– 1.40 per communication. Both Vrtík and Expandeco clients see this as a fair model for both parties, where it is possible to keep the cost of customer support below EUR 500 in the off-season and only seasonally when the customer line needs to be boosted. 

  • When building your own team, expect to pay around EUR 6,000-8,000 per month. This will pay off for the larger players as a base for further expansion in the region. 

Do not forget

  • Customer support should also be localised, remember a local telephone number.

  • Livechats and social media are rather standard in our market, in other CEE countries they can become your competitive advantage.

  • A properly UX-ed website will avoid confusion (and users leaving). Pay attention to sufficient product descriptions, shipping methods, payment and FAQ.

A lot of successful players have different variants for different markets and it works great for them. - Tomáš Vrtík, Managing Partner of Expandeco 

According to Microsoft research, up to 60% of customers are put off by a poor customer support experience and do not make further purchases in an online shop. A satisfied customer is the ticket to long-term market establishment, so focus on good customer service right from the start. Eliminate even seemingly minor barriers to communication: from day one in the new market, have an active phone line with a local phone number and a local bank account

From freelancer to agency to in-house team? And what if you can skip each stage?

According to Tomáš Vrtík, Expandeco's boss, there are several options for building customer care, and one can over time spill over into another. But it doesn't mean you have to move on from the seemingly “cheapest” option. On the contrary, our goal is to challenge you to choose the ideal solution straight away. Which one will it be? 

Hiring a freelancer present in the country (or has live, constant contact with it), knows the local customs and has the skills to work in a customer care position, is accompanied by the lowest price (around EUR 300 per month). But at the same time, you are faced with the challenge of finding such a person in a market where you are just starting out, building the right processes and systems to ensure that this person, for whom you are likely to be one of the clients (we assume that if you were to get the most out of them, you would adopt them straight into the team), works efficiently in a motivated manner. When setting up your working style, also bear in mind that certain customer care channels are busier at certain times (telephone from 9:00 am to 4:00 pm), while others operate non-stop or are more frequently used in the evenings and at weekends. 

Online shoppers have already experienced and believe that even support can be outsourced in the long term, that the quality of care is assured if you have good systems and a serious partner.

A clear trend after the pandemic: Outsourcing customer care to an agency

A popular strategy, especially nowadays, is outsourcing. “Online shoppers have already experienced and believe that even support can be outsourced in the long term, that the quality of care is assured if you have good systems and a serious partner,” perceives Managing Director at Expandeco Tomas Vrtik, adding that the pandemic has further blurred the distinction between having your own team working remotely from Budapest or handing over responsibility to companies like Expandeco, covering 14 languages and they reporting everything to you. The advantage of outsourcing to experts is that they know the local language at a native speaker level. They are very well versed in the local market, which is a guarantee for you that communication with your customer will be adequate to their expectations. They know the nuances of each market, possess efficient ticketing processes and can help you set up the ideal process on your end. In the era of social media, for example, it might seem that phone and email are obsolete, but 40% of customers resolve their queries by email, and in Romania, for example, customers expect only phone communication, which is also proactive on the side of the online shop. “For the most demanding clients we provide fast response to an e-mail within 1 hour,” says Karin Foltánová, Head of Customer Support at Expandeco. 

The cost of this solution is typically EUR 500–1000 per month. The experience of Petr Schwarz from Babynábytek.cz proves that outsourcing often blends with other options: “We are running Czech, Polish and Slovak support on our own. We have our headquarters on the borders of all three states, so we have no problem finding skilled labour. On the other hand, the Expandeco team operates the line for the more distant Hungary, Romania and Croatia.” Schwarz worked for several years as a director of a company that developed its own online shop solutions and also offered support to its clients. “So I know the possibilities of how to deal with customer support and Expandeco offers an elegant way to delegate this, including overlapping teams and never having a line down due to illness, for example,” he adds. 

How to try the agency? 

“A good way to test the quality of our service is in one country,” advises Filip Minar, Head of Sales at Expandeco, “For example, at Babynabytek, besides doing a good job on customer support, what worked is that we came up with information about what is missing on the site, what customers can't find and what they often ask about. The other important side of the equation was how the client conceived of it. They were very well prepared on the marketing and product side, they had the market mapped, the processes in place and so the joint adjustments were all the more effective.” But you don't need months to test whether outsourcing works. According to Minar, you should know within a week whether you’ve been lucky: “After testing in Hungary, we created the automated processes for Romania in a week and for Croatia in a few days.” 

Building customer support in-house 

The biggest investment in time and money on a monthly basis is building your own team. “It's not possible to say whether it's from a certain turnover or the size of the online shop. The milestone takes a different form for everyone and it depends more on the internal setup of the online shopper,” Vrtík explains, “Some people think that if they pay a few hundred or a thousand euros more than the agency, they'll be able to get by with a smart Hungarian. They imagine how they will use him/her not only for serving customers, but also for translation or marketing. Not only do they often overcharge in HR costs, but experience shows that people typically strong in customer support don't have the strengths and competencies to edit social media copy or localise websites.” According to the head of Expandeco, the motivation to be closer to customers on the foreign market is a suitable milestone: “Companies that have opened a branch in a country of a certain size have a much better experience. Often it's not about starting with a customer care employee, but rather a country manager to help get to know the market better and build a local team – office that will support your presence in that country.” When you come across a skilled customer service person, it's also an opportunity for change, he adds. 

The cost of this solution ranges from EUR 6,000–8,000 per month depending on the offices and the country where they are located. On the other hand, trained, motivated team members will be useful for other tasks according to their skills, from translation to copywriting.  

The biggest problems I see if you decide to handle customer support in-house are substitutability, natural turnover, management, quality and, last but not least, price.

“The biggest problems I see if you decide to handle customer support in-house are substitutability, natural turnover, management, quality and, last but not least, price,” says Schwarz. But in the same breath, he sees the benefits of forming one’s own team and investing in people: “I can imagine that if Babynabytek.cz obtains several times the turnover in individual countries, then in-house customer support will make sense, but we are not there at the moment.”

How to improve customer support with minimum costs?

Minimise your customer support costs by optimizing your website. Correctly translated product descriptions, including all parameters and instructions for use, a well-described ordering and shipping process, complaints policy and FAQs are key. Properly developed and localised questions and answers can save the support team hours of work, but inaccuracies in translation lead to negative comments. This is confirmed by Klarstein, the retailer of food processors and design appliances for the home: “You can't build a quality brand image if you're a laughing stock with your content levels, and local customers will fixate on you as: Klarstein? Are they the ones whose texts I always have so much fun with?” says Head of Branding and PR CEE Matúš Kollár. In 2021, they set out to improve the customer experience in nearly a dozen markets, while building a unified, memorable and trusted brand across Europe. “The content of the website and the texts of the campaigns were one of the key elements of success,” Kollár says.

Read a case study on translations into 9 languages, the right setup for collaboration, as well as gems from the work of translators.

Case Study Klarstein

How can you optimise the shopping experience to make your locals feel at home? Find out what such a home looks like. The search does not have to be difficult. Go to the largest local price comparison site and find the best competitors in your segment the ones with the most positive reviews. Simply click through these, note the common features of the baskets and try to get as close to this as possible,” says the Expandeco boss. We can also connect you to specialists in different countries who will prepare a tailor-made basket for you.” SEO, URL and overall we need to localise those thirteen steps we counted to proper localization.

Did the article help you get an idea of how much customer support costs and what form to choose? In the fifth part of this miniseries of articles, we will discuss the costs associated with accounting management and approach the necessary legal framework needed for doing business abroad.

Do you have many specific questions now about how this will work and look tailored to your business? Feel free to contact us. You can find expansion consultation form on our website.

Filip Minár Head of Sales
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