The 6 Customer Service KPIs You Should Be Tracking
Key Performance Indicators (KPIs) carry an aura of authority, and for good reasons. Like Peter Drucker said, "you can't manage what you don't measure."
If you're not measuring your customer service, how will you judge the success of your actions? If you're serious about improving customer service, if you want what Mireille Pilloud calls 'a seat at the adult's table', you need to track your KPIs.
To prevent paralysis by analysis, however, you should track only those KPIs most important for your service department. Here are the 6 KPIs that should be in every customer service report.
1Customer Satisfaction Score (CSAT)
Measuring customer satisfaction is hard. You’re asking your customers to express an emotion, and emotions are harder to grasp than objective facts, such as the sales department's financial KPIs.
Customer satisfaction is everything. Measuring customer satisfaction is hard.Bill Price, President of Driva Solutions
The most popular KPI for measuring customer satisfaction is the CSAT. With it, you directly ask your customers to rate their satisfaction with your business, product, or service. Your score is the average of all customer responses.
Your CSAT scale, can consist out of regular numbers, but it could also consist out of stars, smiley faces, tiny unicorns, etc. You can also choose various scale ranges, but note that simpler scales are more robust to cultural differences.
2Net Promoter Score (NPS)
The NPS measures how likely your customers are to refer you to someone else. Its advantage over the CSAT is that it aims at an intention, not an emotion. As a result, the reply is less influenced by the mood of the moment.
You ask your customers how likely they are to recommend you on a scale from 1 to 10. Their replies put them into one of three categories: promoters (9-10), passives (7-8), or detractors (0-6). Take the percentage of respondents who fall under the ‘promoter’ category (10 - 9) and subtract it from the ‘detractors’ (0 - 6). Voilà, there’s your NPS.
Some tools work with email questionnaires. Trustfuel NPS (free) and Promoter.io (paid) are two popular ones. Others work with in-app surveys, like Wootric (freemium), appears while your customers are still on your website or app.
Rob Markey from Bain & Company gives tips on how and why to benchmark your NPS competitively. Take a look at the Net Promoter Network to put your results into perspective. Leading customer loyalty companies like Apple reach scores of 75-85%.
3First Response time
Speed is a stable determinant for customer satisfaction. Your customers expect a smooth and efficient shopping experience. Quickly answering your customers’ requests is essential, as your competitor is only a mouse click away. Customers are tuned like the Spice Girls: “If you wanna get with me, better make it fast!”
A Salesforce study found that a third of the respondents felt positive about companies that offered a quick first response. But here’s the juicy part: Customers preferred a response that was quick instead of one that was thorough but delayed - even if it didn’t solve the issue.
Make use of this by sending out an automated message that “someone’s on the issue”. This is technically not an actual first response, but a handy trick to comfort customers that their request reached target which makes their wait more bearable.
At Userlike, we've recently ‘outsourced’ this task to Chat Butler, a friendly chatbot that greets our customers and collects their questions when no Operator is available in the chat.
Bear in mind that customer expectations regarding response times will differ depending on the chosen contact channel.
4Customer Retention Rate
Customer retention refers to a business’ ability to keep a paying customer over a set period of time. Acquiring new customers is expensive, costing a business 5 to 25 times more than it takes to retain one.
You might attract a lot of visitors to your website and convert them into paying customers, but can you hold on to them over a longer period of time?
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The prosperity of your business relies largely on retaining your customers. According to RJmetrics, the most successful Ecommerce businesses get more than half of their revenue from returning customers. One KPI to keep an eye on here is the customer retention rate.
It shows what percentage of your customers have stayed with you over a given period of time. It can be calculated on an annual, monthly, or weekly basis. Jeff Haden outlines an accurate way of measuring it:
- Customer Retention Rate = ((CE – CN) / CS)) x 100
- CE = Number of customers at end of period
- CN = Number of new customers acquired during period
- CS = Number of customers at start of period
Check out this post to see a sample calculation and learn more about customer retention metrics.
This multi-dimensional KPI measures ‘service + quality’. It was developed 1990 by Valerie Zeithaml et al. in their book “Delivering Quality Service“ and is still considered the most common method for measuring the subjective elements of service quality. You ask your customers to rate your service you compared to their expectations.
According to decision-making theory, it’s easier to make judgements based on an anchor (here: your expectations). This allows us to better understand and respond to abstract information (your satisfaction with a service).
The questions cover what the authors call the 5 elements of service quality: RATER.
- Reliability - the ability to deliver the promised service in a consistent and accurate manner.
- Assurance - the knowledge level and politeness of the employees and to what extend they create trust and confidence.
- Tangibles - the appearance; of e.g. the building, website, equipment, and employees.
- Empathy - to what extent employees care and give individual attention.
- Responsiveness - how willing the employees are to offer a speedy service.
The first half of the questionnaire targets your customers’ perception of the provided service (“how it is”), the other half their expectations (“how it should be”). Measure the items with a seven-point Likert scale, ranging from ‘strongly disagree’ to ‘strongly agree’.
The resulting difference of the comparison indicates how your customers’ expectations deviate from the actual service you offer.
While all dimensions are important for service quality, some might be more relevant than others for your use case. Also, keep in mind that expectations of ‘excellent service’ are usually higher than what people would need to be satisfied with it.
Take a look at a sample SERVQUAL questionnaire here.
While we focus on the KPIs mentioned above, it’s easy to forget a factor which is not that obvious, but equally important: your team. If your employees aren’t satisfied with their job, your service will suffer.
According to HBR, “long-term employment relationships are the key to high performance and enduring levels of employee motivation.” A high employee turnover, on the other hand, will cost you up to twice of an employee’s salary for finding and training new employees.
So how do you measure employee engagement? The standard approach is to ask your employees direct questions like, “How meaningful is your work?”, “How much do your opinions about work matter to your supervisor?”, “Are you proud to be a member of your team?” SurveyMonkey (Freemium) is a tool with which you can set up such surveys.
Ryan Fuller suggests a different approach in his HBR article. In contrast to measuring self-perceived engagement, he proposes to analyze actual engagement. The analysis should consist of the following engagement levels:
- Management quality and time investment
- Influence from colleagues
- Work schedule
Both approaches provide valuable information, but the employee surveys suffer from a number of limitations.
One is the availability bias (distortion by recent or flashy events that come to mind most easily). Another is gamed results (respondents answer according to what they think you want to hear rather than what they really think).
In the end, customer service is about people more than about numbers. Turn your company into a support powerhouse with internal customer service and boost your employee engagement.