Calculating Your Critical Mass of Pilot Customers – MCC Mini Series 

Calculating Critical Mass

So you want to quickly start your Live Chat Service by acquiring a group of pilot customers as soon as possible. 

The first question you may ask yourself is: How do I stay afloat? 

But to thoroughly answer this question, you must first ask yourself another question: 

What numbers should I be after?

The first critical number relies on discovering when target consumers are online. 

The best route: Check your Google Analytics. 

But first, you need to understand web traffic in your particular sector. 

95% of all traffic is between 9 a.m. and 11 p.m. 

So offering services accordingly will allow you to reach the vast majority of your prospective clients.

But, to be honest, that’s a lot of hourly coverage – roughly 400 hours a month – which is quite expensive to staff and raises the bar on your critical mass. 

A great alternative could be offering your services initially during evening and weekend hours, drastically reducing your operating hours and making yourself a commodity as one of the few options in the space at that particular time. 

Weekdays from 5 p.m. to 11 p.m. and weekends from 9 a.m. till 11 p.m. add up to 250 hours a month. 

But, of course, this approach also reduces reach to 55%. 

The second critical number involves your chat percentage. 

Let´s say your average agent wage rounds out to $10 an hour. 

This equates your monthly agent pay to $2,500. 

The other variable in this equation is website traffic. 

A safe bet would be a 1% conversion rate on unique website visitor-to-chat conversions. 

So to break it down, 1,000 website visitors would result in 55 chats. 

Lost yet? 

It will all come together soon. 

Remember, we only cover 55% of all website traffic, so the original 1,000 is reduced to 550 visitors at a 1%visitor to-chat conversion rate, equalling 55 chats per 1,000 gross visitors. 

Voila! 

We have our second critical number.  

Now, when talking to your prospects, your key interest is finding traffic numbers. 

These numbers directly translate their weight in your pilot-group assembly. 

So, to round out this break-even revenue calculation example, you have to set your average sales price per chat. 

Let’s assume you’re charging $5 per chat – and there it is, your third critical number. 

Now, let’s do some serious math.

Begin with your initial costs: add your $2,500 per month agent cost to your project manager’s fee of $3,000 per month. 

Don’t forget these numbers are up to you; you can consequently set this bar as high or low as you want. 

Within this calculation, you may also consider transferring your acquisition costs – the money you spent over the first three months acquiring your pilot customers.

So the total cost of a six-month pilot period would be $2,500 plus $3,000 multiplied by six, equaling $33.000. 

This means you would need $5,500 in monthly revenue to maintain for the first six months. 

So if chats are packaged at $5, your team would need to average 1,100 chats on a monthly basis to hit this number. 

Which, consequently, means you will need to onboard a group of pilot customers with a total of 200,000 visitors per month.

For the workforce planners who may be asking themselves: Can this be handled by one agent at a time? 

The short answer…

Absolutely! 

But that’s another topic for another time. 

If you succeed to reach this goal in three months, or even four, you will have laid a strong foundation for a successful business. 

Then you can start focusing on the chat delivery process. 

Want to do the math yourself? Here’s our Chat Center pilot phase critical mass calculator

Building Out Your Agent Team – MCC Mini Series

building out your agent team

Throughout steps one and three of the launch of our live chat business, we focussed on acquiring a pilot group of customers.

Once you are convinced this hurdle is passed, it is time to recruit and onboard your agent team.

Since your shifts add up to 250 hours a month, you will need to hire roughly 10 agents.

Provided each agent works two shifts of four hours a week

Hiring

Where do you start when looking for prospective employees?

Be sure to ask yourself: At what point on the spectrum from college student to sector professionals do I want to start my search?

Who are you really looking for?

College students have a lot going for them.

As Millennials, they naturally possess multi-tasking skills that are crucial to handle simultaneous chats, and their typing and good conversational skills are an advantage.

But, most students lack commercial skills.

This can be quickly remedied with solid guidance and training.

Your agents will be working in shifts of three to five hours, which is perfect because most students prefer short, flexible schedules.

The fact that this work can be done anywhere, anytime is appealing to them.

In fact, some might say this is the ideal student job…

beats flipping burgers, right?

And finally, we’ve found that once you’ve found a few good hires, peer-to-peer recruiting from their network is a breeze.

On the other hand, hiring sector professionals makes sense for many reasons.

They’ll be ready to go from day one, but their hourly rates will be higher.

They will bring in industry expertise, but it may be a problem that you can’t offer a full-time job, specifically when you are scaling up; the work is quite demanding, so long hours are not an option.

The good thing is, no matter which group you go after, targeting via Facebook will bring in more applicants than you can handle.

Payroll

Employment contracts and payroll considerations will differ from country to country, depending on your local and national tax and employment regulations.

Typically you want to be exceedingly flexible in your pilot phase.

Outsourcing payroll was what we did in the beginning.

No hassle – just pay the monthly invoice.

Everything else is taken care of by someone else.

Yes, there is a price to pay, but being able to focus on the primary process of acquiring pilot customers and delivering chats is paramount.

As we grew, the cost of outsourcing just didn’t make sense for our specific situation, so we brought payroll in-house, although we take different approaches in varying geographical markets.

Onboarding new hires

The key to onboarding is having a process in place.

Currently, on average, we handle 50 applicants a month.

We can’t just wing it.

So we learned early on that you must plan ahead.

What do your new hires need to know?

  1. How to interact with the chat software.
  2. What makes a good conversation. (read Five Criteria for a Great Conversation  ?)
  3. Your clients’ business goals and company info.

This is where Chatshipper’s technology and business support steps in.

We set up an e-learning program to teach your agents ChatShippers’ features and hacks.

Through this we’ve developed the 5C-model for excellence in conversation.

The beauty of this system is that it provides you and your team a common ground to evaluate performance and collect all relevant customer data while acting as a knowledge-base for agents throughout chats.

Finding, training and retaining talent may sound daunting at first, but when you follow the process above and focus on quality over quantity, you’re setting yourself up for success.

If you have any questions or concerns about selecting and onboarding your first agent team, please don’t hesitate to ask.

And as always, your feedback is greatly appreciated.

To keep the entrepreneurial momentum going, don’t forget to check out our other posts, including Starting Your Own Chat Contact Center in Three Months.

Pitching Your Live Messaging Contact Center: The Why, How & What – MCC Mini Series

How to pitch your MCC

Every sale starts with a pitch.

So you need to win over prospective customers with an end goal of participation in your pilot.

Throughout this process, it’s important to remember: Don’t sell your service – sell participation in a six-month pilot at a fixed price.

This is how you stay away from the pitfalls of live chat as a service.

The ultimate goal of any pilot is to get the results and evaluate, right?

That means you won’t have all the answers at this point, and you should be transparent about that fact.

Entrepreneurs can generally spot growth opportunities and are willing to take risks.

So appealing to those personality traits is usually a good idea.

They can relate to the challenges of founding a company, and they can decide quickly.

This is why founders and entrepreneurs are my favourite pitch targets.

I know it is tempting to try to talk to the big fish in the pond.

But generally, they are risk-averse – going for a track record and taking their time to decide. So save them for later.

So how do you pitch?

As far as I’m concerned, a pitch should consist of three elements:

  1. The Why

  2. The How

  3. The What

 

The Why

Why should your prospect sign up?

Because they are missing business opportunities.

They have a beautiful website. Google Analytics shows the numbers – thousands of monthly visitors.

But they are just that – numbers.

The magic of live chat is that once you place the widget on the website people will start conversations about topics that matter to them, which will result in leads.

So spending lots of money on a beautiful website and advertising to drive traffic is wasting money if visitors have no way to engage.

Ask your prospects: When was the last time you filled in a webform? What are your expectations when you email an organization?

Because today’s consumers want it now, and you better give it to them or they’ll look elsewhere.

 

The How

This will be your prospect’s key question and concern: How is it possible that your agents can answer questions about my company, products and services?

You have to move this rock out of the way by focusing on 80/20.

Roughly 80%  of all conversations revolve around seven to 15 topics for which your employees can be prepared and trained.

The rest will be learned step by step by adding missing information to the know-how system.

Second, have a knowledge-based system in place.

During onboarding, your client will gain access to his or her online client portal, which contains articles, location and campaign information.

The info can also be gathered via an online questionnaire.

It is equally important to point out that everything is in writing, so agent performance is very transparent.

Finally, put a feedback system in place, making it possible to gather feedback (ratings, comments, etc.) from visitors.

This feedback loop will be yours, and your clients’, handle on quality monitoring. 

The What

You will be staffing your client’s website 250 hours a month, allowing them extended opening hours.

Effectively their prospects can now reach out to them seven days a week, 14 hours a day, given your service profile is Monday through Friday 5 p.m. to 11 p.m. and weekends 9 a.m. to 11 p.m.

What will you be delivering?

Leads and service chats. 

But keep in mind, percentages will differ from sector to sector.

While onboarding clients, their business goals are translated into tangible results.

What kind of outcomes are desirable for the business?

Let’s use a car dealership for example.

They may be looking for showroom visits, test drives, scheduling service appointments and financing offers.

During the chat, agents will select result codes and collect the associated data-elements, which are shown as form fields.

When the chat ends, the client receives an email containing the transcript of the conversation as well as the contact data gathered.

Finally, it’s time to talk numbers. How many chats should you expect, and what will be the cost of the pilot participation?

In our previous blog Calculating Your Critical Mass of Pilot Customers we ran the numbers.

All you have to do is apply those numbers to your prospects.

For example, you are talking to a prospect with 15,000 website visitors per month. Expected total chats would be 1% of 7,500 visitors or 75 chats.

And just so you’re aware, a 1% conversion rate is very conservative.

Their pilot cost of $15k out of $200k (break-even visitors per month) equals  7.5% of the total pilot cost.

Their share is $2,475 total or $412 per month.

This then breaks down to $5.45 per chat or roughly $16 per lead (if utilizing a 30% lead conversion).

If the numbers add up for your client’s business case, agreeing to participate is really a no-brainer.

To round it out, be sure to keep your presentation really compact, eight to 10 slides work fine.

Be sure to communicate participation costs and results on 1 page.

And ask for a decision on the spot.

Good luck!

How to Choose Your Target Market – MCC Mini Series 

Choosing a target market for your business

When launching your live chat service, your decision on which clients to take on is an important one. 

But, there are a few questions that you need to ask yourself before all else: 

Are you going after sales, service or both? 

Are you focused on a niche market or a more generalised clientele? 

And finally, is your expertise focused on B2B or B2C? 

Now, before we start making choices, it’s important to consider the cost of live chat. 

Live chat, because of its need for an actual human, is quite expensive. 

Of course, this is relative. 

It isn’t necessarily more expensive than outsourcing calls, but it’s still costlier than an FAQ 

page. 

Selling a book, for example, via chat technology may not be a viable business, but selling an apartment could fare much better. 

So look for a niche with a relatively large transaction value or a high lifetime value. 

Selling a house or car is an example of the former; selling a mortgage or annuity, the latter. 

Both are viable options, but you need to understand your clients’ business goals and models.

 

Sales and/or service?

What resonates with you? 

Are you the making-customers-happy type? Or do you feel satisfied when the deal is closed? 

This might be a good indicator of where you want to go.

Consider this: Sales involves revenue. 

Do you enjoy collaborating with sales managers and marketing directors? 

Service, on the other hand, involves cost. 

It’s important to understand that the service manager will have a hard time explaining why another costly customer channel needs to be added. They also feel less pressured by time than the sales team since they start from scratch month to month. 

Finally, service typically requires access to back-end systems, adding complexity to your already complex startup. 

Later on this might be what you want because integrating your clients’ business processes could also be a barrier to switching, but in the beginning, it could make things difficult.

You will either be measured for your contribution in generating sales leads or customer happiness. 

Are you starting to see a pattern here? 

In a way, the choice makes itself. 

In the beginning, I would recommend focussing on sales. 

 

Niche or generalist?

When you are bootstrapping to get your business going, it is tempting to spread the risks by taking on different clients. 

But none of the generalist chat centres we know of have scaled as fast as the focused ones. 

Restraining yourself has many advantages. 

It’s important to focus on one niche and one niche only.

Over time, you will build a reputation in that specific industry and profit from your detailed expertise. 

Then, focus on your portfolio. 

It displays your success and lowers entrance barriers for potential clients. 

Showing the prosperity of your clientele is never a bad thing. It builds credibility in your corner of the industry, and it makes interested parties feel confident in your work and reputation. 

Choosing a niche also has operational benefits. 

Having many clients in the same industry will improve your agents’ performance while relieving pressure on your training efforts.

B2B or B2C?

B2C is a highly logical choice for one simple reason:

B2C companies tend to have more website visitors because there are more consumers than businesses. 

Of course, this largely depends on the size of your geographical market. 

In the U.S., B2B potential may be large enough to thrive. 

But in Switzerland – no chance.

The key thing to remember here is that website visitors directly correlate to the chats you will be handling. 

So you should always strive for big numbers.

 

What’s your niche? 

We started in the realty business. 

After two years solely focused on real estate, we entered the automotive industry, which has been a real catalyst. 

The point being, we spent two years and all of our energy hyper-focused on one industry. 

And when the time was right, we expanded to great success. 

It’s important to stay focused. 

So to help get the ball rolling, we’ll leave you with a few examples of both high transaction and high lifetime value niches that have great startup potential. 

High transaction value

Realtors

Apartment sales

Lawyers and notaries

Auto dealers and vehicle OEMs

Boating

Cosmetic surgery 

Ophthalmology

Kitchen and bathrooms

Contractors

High lifetime value

Mortgage  (regulated)

Insurance (regulated)

Dentists and Orthodontists

Leasing and Financing

How to Start Your Own Messaging Contact Center in ONLY Three Months – MCC Mini Series

Starting your own messaging centre business

Starting a new business is a hard job. 

Make no mistakes about it – there will be obstacles to overcome. 

But getting it off the ground isn’t impossible.

From building Web1on1 (our Live Chat Service Provider) we learnt that there are 3 initial key steps which if executed are the pathway to success. 

And we want to share those steps with you. 

We started as two guys with an itch to start something, and after six years and the addition of 200 colleagues, the business has grown to  seven figures in yearly revenue and has spread across 7 European countries.

So here it goes.

We’re gonna share those 3 first key steps with you. 

As well as how we did it and how anyone with time and a lot of effort can do the same. 

Why?

 Because we hope to inspire and help build this industry. 

We want partners who utilise our platform, ChatShipper, to build the business they’ve always known they could. 

And, if executed correctly, The following three steps are the pathway to an excellent business venture. 

Step 1: Convince the critical mass 

The first question you’ll have to answer is what is a managed live chat or messaging service? 

Well, I’m sure you’re familiar with the communication channel of live chat or Web chat on websites. 

But have you ever thought about who is on the other side?

Most large companies will have their own staff answering chats. But what if you are an SMB and your Web traffic is not enough to have your own employees answer chats? Then outsourcing live chat is a solution worth considering. 

Live chat service providers or managed chat providers do just that. 

So there is your business model. 

Pretty straightforward, right? 

Well it is, but you must convince a critical mass of pilot customers first. 

So that is step number one. 

Launch as early as possible

Talking about a business you WANT to start is quite different from successfully starting a business. 

So my advice: focus and move fast. 

In our case, it only took us three months to go from an idea to tangible revenue. 

OK, why focus? 

Well, focusing means you’re pushing yourself to find a niche market. In our case: realtors. 

You must choose one that is close to your passion and experience. 

Need ideas? Here are some target markets you should consider.

Next is pitching your idea to your prospects. 

Your prospect list is probably substantial (it should be since you would want to serve a substantial market).

So who do you pick? 

Focus on identifiable entrepreneurs within your target group. They can identify with your challenge of starting a business, and they can appreciate the risk-taking. 

Cold-call them and appeal to their curiosity by asking for feedback on your new business venture. 

Then, set an appointment for an online meeting (GoToMeeting, Join.Me, etc.) and deliver your pitch.

About the pilot period

The advantages of selling pilot-participation are plenty. 

First, it implicitly states you don’t have all the answers yet. 

It allows room for error. 

And you don’t have to set finite pricing. Again, this period is about learning on both sides. 

Your critical mass

How many pilot customers do you need? Read all about it in this post (link somewhere here?). It will help you make some crucial choices. 

Now you know your target and how much is needed to launch, it’s time to dig in and earn their trust.

 

Step 2: Onboarding your chat agents

But do this only after you are 100% positive about acquiring your critical pilot customer mass. 

Spoiler alert: You will need to spend some time recruiting your staff. 

Since your initial shifts add up to 250 hours a month, you will need to hire roughly 10 agents, assuming each agent works two four-hour shifts per week.

To help ensure you onboard the right people, here are some tips on how we built out our agent team

 

Step 3: Setting your clients up for success

Once you have closed deals with your pilot customers and recruited and trained your agent team, only one last step remains – technical onboarding.

In other words, activation of the chat widget on your client website and configuring their accounts in ChatShipper.

The latter consists of three elements:

  1. Collecting information on your client’s business (referred to as know-how).
  2. Connecting the messaging channel.
  3. Preparing to ensure the correct delivery of the chat conversation to your client.

Oh, and you don’t want to forget to add your chat agents via ChatShipper.

I understand if this sounds a bit vague at this point, but not to worry, we will guide you through the entire process. That’s what we’re here for. 

There you have it. Everything you need to start a successful chat center in a matter of a few months. 

If you have any questions at all, please don’t hesitate to contact ChatShipper at any time.