A famous quote from American retail magnate Sam Walton, founder of Walmart, says: “There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.”
This is an excellent illustration of why, as any customer service professional knows, the focus on customer service is so crucial for any business.
When a business sets out to improve its customer service programme, it’s imperative that it does so in a way that is measurable. Because if we seek to improve for improvement’s sake, without measurement, we can’t ever really know how well we have done!
Putting into place customer service metrics will help companies benchmark against competitors and help them to exceed their own expectations, stretching themselves to greatness.
If your company is ready to uplevel its customer service programme, here are 12 ways you can measure and track the impact of the changes you make. Doing so will help you get the most out of your customer service boost and take your business to new heights.
What are KPIs?
Key performance indicators, known as KPIs, are a business world term for the metrics a business sets to measure its performance, progress, or impact. Traditional KPIs include factors such as profits, customer acquisition numbers or sales. However, each business will typically have a different set of KPIs, depending on its unique business goals.
Often, businesses will have separate KPIs for different projects or initiatives. Such KPIs can help the business measure the specific impact of that particular initiative.
Overall business KPIs can be established quarterly or annually, so a business has clear goalposts to work towards and can ensure that it meets them.
Why are Customer Service KPIs Important?
The stakes for customer service have never been higher. Companies are always looking to cut costs while needing to continuously improve and innovate in the arena of customer satisfaction as modern customers’ expectations increase.
As such, customer service KPIs are critical because they help inform a business’s success when it comes to customer service. They will be able to measure how a business is doing in terms of its customer service approach and whether it is meeting the goals it has set out for itself.
In other words, when a company has clear customer service KPIs, it can track its team members’ performance against those KPIs and can better understand what is working and what isn’t. They can use the insights to either reward or offer agents support where needed.
When a business has specific customer service KPIs in place, it provides a helpful, objective view into how its customer service team is performing, which can then be adjusted as needed along the way.
What Are the Most Important KPIs?
While each company will likely have different customer service KPIs based on its specific customer service goals and areas of focus, some fundamental KPIs are beneficial for any customer service-focused business to evaluate. These are the ‘core’ KPIs that most crucially tie to performance against customer expectations. Here are 12 that every business should track.
12 Customer Service KPIs Crucial to Track
The following are essential customer service KPIs that are nearly universal to any business that serves customers. Some are pretty practical (e.g., the time it takes to resolve an issue), while others are a little more intangible (e.g., customer feelings towards an interaction). Nevertheless, these are the fundamental KPIs that any business seeking to optimise its approach to customer service should be looking at.
1. Customer Satisfaction Score (CSAT)
The Customer Satisfaction Score (known as ‘CSAT’ in the industry) is one of the most important metrics for ensuring your costumes are satisfied. As it says on the tin, it uses customer feedback to measure how a customer feels about your product, service, or overall customer service interaction with your business.
Typically, businesses will measure CSAT using straightforward questions such as; “On a scale of 1 to 5, how satisfied were you with your customer service experience today?” Depending on how each customer responds will determine which actions to take next.
Negative responses will provide an opportunity for a business to better understand why the interaction was unsatisfactory, what went wrong, and how the business can stop this from occurring in the future.
Actions based on low CSAT might include the business providing better training for its customer service teams or implementing updated customer service procedures.
2. Employee Satisfaction Score (ESAT)
Along with customer satisfaction comes employee satisfaction. These are often two sides of the same coin. The more satisfied an employee is with their job and role in the company, the more they will be better equipped to provide your customers with the type of high-quality, positive service that leaves the customer feeling satisfied.
It’s unfortunate that the customer service industry has one of the highest rates of attrition of any industry, meaning that employee turnover is high. When a company takes the time to measure employee satisfaction, assigning an employee satisfaction score (ESAT) to each employee, it can help improve employee performance by ensuring that customer service agents are well supported and satisfied with their roles.
Employee surveys, regular line manager check-ins and open dialogue with upper management are all tactics that a company can use to ensure its ESAT scores remain high.
Conversely, if a company finds that its ESAT scores are low, it can implement better employee training, performance bonuses, and other benefits to help its employees feel more confident and happier in their roles.
Maintaining a solid ESAT score can help reduce employee attrition, which ultimately saves money on recruitment, training, and development. Not to mention that having satisfied staff members also ensures that your customers are more likely to be satisfied with their customer service interactions as a byproduct.
3. Customer Effort Score (CES)
The Customer Effort Score (CES) measures the complexity of a customer’s effort to have their problem resolved. The CES will depend on factors such as time spent, the number of interactions, and the number of times the customer had to reach out.
For example, did the customer have to email or call multiple times before their issue was resolved? Or was it resolved in the first interaction with customer service? Did the customer have to chase customer service to get a response, or did a customer service agent proactively follow up with the customer to resolve their problem?
A straightforward way of measuring CES is to survey each customer after a customer service issue. Using a scale ranging from ‘very easy’ to ‘very difficult’, you can find out just how challenging each customer found their interaction with your customer service team.
If the CES score is low, you’ll want to look at ways to improve this, perhaps by eliminating the number of touchpoints or by putting into place a better procedure that makes contacting and interacting with your customer service team easier for the customer.
4. First Response Time (FRT)
First Response Time (FRT) is the time it takes each customer to receive a response following their initial outreach to your customer service team.
In the modern world, where everything moves quickly and where customers expect to get instant reactions and help, FRT can be a helpful metric in ensuring that your customer service team is highly responsive and provides your customers with the quickest responses and resolution times possible.
FRT is especially important if you consider research showing that over 80% of customers expect a response within 24 hours of a customer service enquiry sent via email.
Related: 5 Ways to Reduce Customer Response Times
5. First Contact Resolution
First Contact Resolution is similar to but differs from FRT. While both pertain to customer service response times, First Contact Resolution specifically relates to the ability of a company’s customer service team to resolve the customer’s problem at the first enquiry.
Because let’s face it, no customer wants to have to reach out to customer service multiple times to have their problem resolved! Your business shouldn’t want this either, as it clogs up your agents’ valuable time and does little for your reputation. If an issue can be resolved quickly and efficiently upon first contact, it really should be.
To measure First Contact Resolution, you should ask your agents to log each ticket by ticking a box as to whether it was resolved after an initial customer interaction or whether it took several customer interactions and back-and-forths to complete. You can also ask your customers the same questions.
Measuring First Contact Resolution can be a motivational tool for your employees. You can challenge your agents to see how many can close tickets with the highest number of First Contact Interactions and offer reward schemes accordingly.
6. Average Handle Time (AHT)
While it is essential to get back to your customers quickly after they’ve made the initial customer service contact, Average Handle Time (AHT) is an important related metric, which provides insight into how fast, on average, your team members can resolve each issue.
Calculating AHT involves looking at the time it takes to close a customer service ticket, starting from the customer’s initial contact with your team, through all of the messages, all the way through to the final resolution of the issue.
AHT can be optimised by training staff to optimise back and forth interactions with customers, ideally cutting down on the number of interactions the agent needs to make to solve the problem. AI technologies such as chatbots can help here, as they are designed to provide answers whilst minimising interaction time.
7. Cost Per Resolution
We all know that ‘time is money’, and this rings especially true when we talk about the cost of resolving each customer service issue. The longer a case takes to resolve, the more overhead it uses, including salaried employee time.
Understanding how much each resolution costs can also help determine whether AI tools like chatbots might be a helpful solution that will yield a good return on investment (ROI) for your company. Therefore, it is important to pay attention to your Cost Per Resolution Score.
You can do this with a simple calculation: take your monthly operating expenses (including employee salaries, overhead, technology, etc.) and divide it by the total number of customer support tickets. This will give you the cost per resolution.
Once you’ve worked this out, you can see whether your cost per ticket is high or on the rise and if so, you’ll want to look at how your company can implement efficiencies to reduce this cost.
The action to reduce the Cost Per Ticket could be a matter of increasing spending on employee training in the short term, which, ideally, will pay off in the long term as upskilled employees take less time to solve a ticket. Or, as mentioned previously, it could mean implementing customer service technology such as chatbots, which will help resolve customer service issues more swiftly.
8. Volume By Channel
In today’s world of customer service, your customers are reaching out to your team through several different channels, including email, social media, and even messaging apps. It’s essential to understand which of these channels sees the most volume of customer service enquiries and interactions because it will allow you to allocate your customer service resources most effectively.
For example, if you see that more customers are contacting your company via social media than by email to have their issues resolved, then you will want to ensure that you have enough customer service agents staffing the social media channels so that each enquiry is responded to in a timely and efficient manner.
Knowing your channel volume and staffing against it will improve some of the other customer service scores we’ve discussed above, such as First Response Time and First Contact Resolution.
9. Consistent Resolutions
Consistency is important in business, and particularly so in customer service. People will often shop with a specific company or brand because they know that the service they will receive from that brand will be consistent. Amazon is an excellent example of this. Customers know that Amazon’s delivery service is speedy and that any issues will be resolved quickly thanks to Amazon’s diligent customer service team and its approach to ensuring customer satisfaction.
This type of consistency when it comes to customer service resolutions should also be something your business aims for. There’s no better way to stand out from competitors than by being known for your excellent customer service.
To provide and measure consistency in customer service, you want to ensure that all your customer service agents are ‘singing from the same hymn sheet’, that is, that your customer service approach is standardised and fits specific parameters of what it means to provide excellent customer service. You can use AI to analyse your agents’ conversations with customers to ensure that all agents are sticking to the script and procedure.
10. Top Topics
In addition to understanding volume, understanding the reasons why your customers are most likely to contact your customer service team is important. For example, if you see a specific number of customer service queries around a particular product, this could mean that there is a product issue that needs to be brought up to the product team so that the product can be redesigned or so that more specific operating instructions can be provided to customers buying that product.
Or perhaps you notice that shipping status is a top customer service topic for your business. You can then ask yourself whether you are providing enough shipping information to each customer upon the completion of the sale. Perhaps this is an opportunity to overhaul auto-shipping messages and provide better tracking information to preempt these types of enquiries.
Understanding your top topics can give you the insight you need to provide your customers with the information they need before they even ask for it. And that’s good customer service.
11. Net Promoter Score (NPS)
Research shows that customer reviews and recommendations are an important part of the business. In fact, today 90% of customers read customer reviews online before doing business with a company.
Furthermore, 83% of customers say they trust recommendations from family and friends when deciding which company to do business with. This is a testament to the power of online reviews and personal recommendations. Yet, they both have one thing in common: recommendations (whether online or in-person) are driven by customer loyalty. And that’s where your Net Promoter Score (NPS) comes into play.
Knowing your NPS is important because NPS measures customer loyalty. It does this by determining the likelihood that a customer will recommend your business to other people. NPS can be determined simply by asking customers on a scale of 1 to 10 how likely are they to recommend your business to a friend or colleague.
If your NPS score is low, you’ll want to examine why and decide which steps your company can take to build customer loyalty. Often, providing excellent customer service is a key way that customer loyalty is built. Working to improve your NPS will result in more positive sentiment about your brand online, as well as an increase in customer volume based on recommendations.
12. Customer Retention
Ultimately, we all want our customers to come back again and again. After all, it’s more cost-effective to sell to returning customers since the cost of attracting new customers is five times that of keeping existing ones.
Therefore, you want to make sure you measure your customers’ satisfaction with your business and its customer service to ensure that they remain loyal and keep coming back.
Customer relationship management (CRM) software is a valuable tool that allows you to maintain records of the number of returning customers your business sees and ensure that the customer service interactions haven’t negatively affected a customer, preventing them from returning.
Using Customer Retention as a KPI is a way of measuring customer loyalty and continuing to nurture valuable customer relationships for the long term.
Final Thoughts
Ultimately, customer service is about keeping people satisfied, something that perhaps seems almost intangible. However, satisfaction is, in fact, measurable!
By putting into place customer service KPIs, you can measure the elements most responsible for customer satisfaction. This can provide a helpful view into what your company is doing well and where improvements can be made.
When we make customer service measurable, we create quantifiable goals to work towards. Doing so can supercharge our customer service teams, allowing them to provide the most efficient customer service possible by working towards a clear set of parameters. This type of structure and focus is sure to lead to more satisfied – and loyal – customers over time.
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