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8 Essential KPIs for Customer Service

8 Essential KPIs for Customer Service

Approximately 96% of customers affirm that customer service plays a significant role in deciding whether they will remain loyal to the brand. When you efficiently manage a customer's concern, it goes beyond just resolving an issue. It forges a strong relationship based on loyalty and trust, which requires constant effort. 

While satisfaction is a quality that can not be measured in numbers, you can put numbers on your business's ability to ensure this satisfaction. This is where KPIs (key performance indicators) come into play. This article will discuss essential KPIs (key performance indicators) that can help us gauge customer service efficiency.

What Are KPIs?

Kpis In Customer Service

Key performance indicators (KPIs) are measurable values that help organisations track progress towards their strategic and operational goals. KPIs provide concrete, quantifiable data on the effectiveness and efficiency of processes, projects, products, services, and other business activities.

Well-designed KPIs offer organisations several vital benefits:

  • Focus – KPIs focus on what matters most to achieve organisational success. They help prioritise the activities that will have the most significant impact.
  • Monitoring – KPIs enable the ongoing monitoring of performance over time. Organisations can track whether they meet targets, exceed expectations, or fall short. This allows for corrective actions.
  • Alignment – KPIs help align efforts across departments, teams, and individuals. When groups have shared KPIs, they can work collaboratively towards the same outcomes.
  • Improvement – Organisations can compare current and past performance by benchmarking KPIs to guide improvement initiatives. KPIs make it possible to measure progress.
  • Accountability – KPIs foster responsibility across the organisation. Teams and leaders can be held responsible for moving the needle on key metrics.
  • Decision-making – KPI reporting provides objective data that informs essential decisions related to resource allocation, process improvements, strategic planning, and more.

Choosing the right metrics tied to organisational goals and strategy is the key to getting value from KPIs. Effective KPIs are specific, measurable, achievable, relevant, and time-bound. They should be regularly monitored and reported to key stakeholders.

8 Essential KPIs in Customer Service

What Is Customer Lifetime Value

Now that we know the importance of KPIs, let's list some main ones relevant to customer services:

First Response Time (FRT)

When a troubled customer calls your company and expects a quick response, the entire company's reputation depends on providing a prompt reply. This is why First Response Time (FRT) is at the top of our list.

FRT is when a customer must wait for a reply after submitting the first request. It measures how quickly a company responds to its customers. We can calculate the First Resolution time by using a simple formula:

First Resolution Time (FRT) = Time of First Resolution – Time of Initial Contact

The importance of FRT cannot be overstated. A swift reply alleviates the customers' anxiety, while a slow response makes the customers disappointed and frustrated.

Average Handle Time

From the first “Hello” to the final “Thankyou,” average handle time records the time taken for customer service. It is the average time a representative takes to resolve the customer's query.

Generally, lower handling time means greater customer satisfaction, but there are exceptions to this rule. These include all the instances in which swift service comes at the expense of quality. Providing incomplete information and rushing interactions only leads to discontent and frustration.

The most crucial thing in this regard is to strike a balance between speed and quality. You can calculate the average resolution time by using this formula:

Average Resolution Time (ART) = Total Resolution Time / Number of Resolved Cases

Customer Satisfaction Score (CSAT)

Csat Kpis For Customer Service

The customer satisfaction score tells whether the customers were satisfied after a particular interaction with customer service. Surveys typically measure it with straightforward questions like “Please rate your overall satisfaction with our service.” The options usually range from “Very Satisfied” to “Very Dissatisfied.” Besides questions, you can also use a scale of 1 to 10.

Related:  What Is Branding in Business and Why is it so Important?

Net Promoter Score (NPS)

Net promoter score measures the likelihood of the customers recommending you to others. A simple question calculates the net promoter score: ‘How likely are you to recommend us to a friend on a scale of 1 to 10?' The responses fall into three categories:

  • Promoters (scoring 9-10) – Loyal customers who will most likely recommend your company.
  • Passives (scoring 7-8) – Satisfied customers that neither promote nor criticise your company.
  • Detractors (scoring 0-6) – Unsatisfied customers that spread negative reviews.

You can calculate the net promoter score by using the following formula:

NPS = % Promoters – % Detractors

Customer Effort Score (CES)

The customer effort score measures how much effort a customer has to make to resolve a problem or complete an action. It is measured on a scale of 1 to 5, ranging from low to high effort. 

A low customer effort score means the interaction between the customer and the service representative went smoothly. In contrast, a high score indicates that the customer likely faced obstacles during the process. The customer effort score is essential because it is the most accurate predictor of a customer's frustration and loyalty. The lower the CES, the higher the loyalty.

Abandonment Rate

The abandonment rate gives you the percentage of people who reach out to customer service but drop the call in between. You can calculate the abandonment rates by using the following formula:

Abandonment Rate (%) = (Number of Abandoned Interactions / Total Number of Interactions) x 100

The long wait time is the most significant reason for a high abandonment rate. Nowadays, no one has the time to wait for ages listening to a frustrating tune that is supposed to calm you down. A high abandonment rate indicates poor customer service efficiency and leads to a high customer churn rate.

Unresolved Query Backlog

Unresolved query backlog is the number of pending inquiries. You can calculate the unresolved query backlog by using a simple formula:

Unresolved Query Backlog = Total Number of Unresolved Queries at the End of a Period – Total Number of New Queries Resolved during the Same Period

A high unresolved query backlog affects not only the customers but employees. For customers, it causes frustration and dissatisfaction; for employees, it reduces productivity and causes burnout. 

An unresolved query backlog can stem from multiple issues like high call volumes, inadequate staff training, complex customer inquiries, technological glitches, and inefficient workflow processes. We can identify and address the root cause by monitoring unresolved query backlogs.

Number of Escalation Requests

The number of escalation requests represents the number of times a customer's request could not be resolved and is forwarded to higher-level support for help. A high escalation rate negatively impacts the company because people get frustrated when they repeatedly explain the same request. Here is a simple formula that you can use to calculate the number of escalation requests:

Escalation rate (Number of Escalation Requests / Total Number of Customer Inquiries or Complaints) x 100

Endnote

It is important to remember that efficient customer service is the product of continuous monitoring and improvement, not a one-time task. It would help if you made data-driven decisions to stay ahead in the competitive landscape and form lasting relations with your customers.

FAQs

What is the most important KPI for customer service?

The most important KPI is the Customer Satisfaction Score (CSAT). This metric measures customers' satisfaction with the service they receive, usually through a post-interaction survey. A high CSAT indicates your customer service is meeting or exceeding expectations.

How do you measure the First Response Time?

First, Response Time measures how quickly your team responds to initial customer inquiries. It's calculated by taking the median time between when a new ticket/case is created and when the first response is sent. Aim for a First Response Time under 60 minutes.

What is the difference between First Contact Resolution and First Call Resolution?

First Contact Resolution (FCR) tracks the percentage of customer issues resolved on the first interaction, regardless of channel (phone, email, chat, etc.). First Call Resolution (FCR) tracks the percentage resolved on the first call. FCR is the preferred modern metric.

How is the Customer Churn Rate calculated?

Customer Churn Rate = Number of Customers Lost in a Period / Total Customers at the start of that Period. A high churn rate indicates dissatisfaction with your products/services and can signal issues with customer support.

What does Average Handle Time measure?

Average Handle Time (AHT) tracks the total duration of customer interaction, including talk time, hold time, and after-work time for documentation. It indicates agent efficiency and capacity planning.

Why is Ticket Volume a critical metric?

Monitoring Ticket Volume allows you to forecast demand and staffing needs. Spikes in volume may indicate product issues that need addressing. Consistent high volumes could mean more agents are required.

How does Quality Assurance sampling work?

For the Quality Assurance metric, a random sample of customer interactions (calls, chats, emails) is reviewed against criteria like professionalism, knowledge, problem resolution, etc. A high QA score indicates your agents deliver a consistent, high-quality experience.

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Stuart Crawford

Stuart Crawford is an award-winning creative director and brand strategist with over 15 years of experience building memorable and influential brands. As Creative Director at Inkbot Design, a leading branding agency, Stuart oversees all creative projects and ensures each client receives a customised brand strategy and visual identity.

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