6 Most Important Customer Service KPIs
You need to set up definite goals to measure customer satisfaction successfully. In this article, you will find all the most important KPIs for customer service and how to evaluate them.
Customer service Key Performance Indicators (KPIs) are metrics used to measure the performance of a customer service team or department. These metrics include things like response time, resolution rate, customer satisfaction, and first-call resolution rate.
Today, I’ll talk about the most important customer service KPIs, how you can measure them, and give you some tips on general customer happiness.
Table of contents:
- What are KPIs?
- The most important KPIs for customer service
- How to improve customer feedback?
- How to improve customer satisfaction?
- Customer service KPIs: Best practices
What are KPIs?
Key Performance Indicators (KPIs) are metrics used to measure and track the performance of a specific aspect of an organization. They are used to evaluate the success of an organization’s strategies, goals, and objectives. KPIs can be used to measure performance in various areas of an organization, such as:
- Financial: Metrics such as revenue, profit, and return on investment (ROI)
- Customer: Metrics such as customer satisfaction, retention, and loyalty
- Internal Process: Metrics such as productivity, efficiency, and quality
- Learning and Growth: Metrics such as employee satisfaction, training, and development
KPIs are usually specific, measurable, achievable, relevant, and time-bound (SMART). By regularly monitoring and analyzing KPIs, an organization can identify areas that need improvement, track progress toward goals and make data-driven decisions.
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The most important KPIs for customer service
To measure the customer satisfaction score, you need a set of KPIs.
The most important KPIs for customer service can vary depending on the specific goals and objectives of an organization. Below you’ll find the most commonly used metrics.
01 Customer Satisfaction (CSAT) score
Customer Satisfaction (CSAT) is a metric used to measure the level of satisfaction customers have with the service they receive. It is one of the most commonly used customer service metrics and is used to evaluate and improve the quality of customer service.
CSAT is usually measured through surveys, which are typically sent to customers shortly after they have interacted with customer service. The questionnaire typically includes a question asking customers to rate their level of satisfaction with the service they received on a scale of 1 to 5 (or 1 to 10), with 5 (or 10) being the highest level of satisfaction. The survey may also include open-ended questions to gather more detailed feedback.
CSAT scores can be used to identify areas of customer service that need improvement and to track the effectiveness of any changes that are made. High CSAT scores indicate that customers are generally satisfied with the service they receive, while low scores indicate that there may be issues that need to be addressed.
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02 First Contact Resolution (FCR) rate
First Contact Resolution (FCR) rate is a metric used to measure the percentage of customer issues that are resolved during the first interaction with a customer service representative. It is an important metric for customer service teams as it indicates how well they are able to handle and resolve customer issues.
FCR rate is calculated by dividing the number of customer issues that are resolved during the first contact by the total number of customer issues received. For example, if a customer service team receives 100 customer issues and resolves 80 of them during the first contact, the FCR rate would be 80%.
A high FCR rate is generally considered to be a sign of a well-trained and efficient customer service team, as it indicates that they are able to handle and resolve customer issues quickly and effectively. A low FCR rate, on the other hand, can indicate that there are problems with the customer service process or that the team is not properly trained to handle certain types of customer issues.
Improving the FCR rate can be achieved by providing better training, having an effective knowledge management system, analyzing customer interactions data to identify common issues, and providing a self-service channel for customers to resolve their issues.
03 Average Handle Time (AHT)
Another popular customer service KPI is Average Handle Time (AHT). This metric measures the average amount of time a customer service representative spends on a call or chat with a customer. It is typically used to evaluate the efficiency of a customer service team and identify areas where improvements can be made.
AHT is calculated by adding up the total amount of time spent on all calls or chats and dividing that number by the total number of calls or chats. For example, if a customer service team spends a total of 1000 minutes on 100 calls, the AHT would be 10 minutes per call.
A low AHT is generally considered to be a good thing, as it indicates that customer service representatives are able to handle and resolve customer issues quickly and efficiently. A high AHT, on the other hand, can indicate that there are inefficiencies in the customer service process or that representatives are not properly trained to handle certain types of customer issues.
Improving AHT can be achieved by providing better training, having an effective knowledge management system, and analyzing customer interactions data to identify common issues, and providing a self-service channel for customers to resolve their issues. Additionally, reducing hold times and simplifying the process for customers can also help to decrease AHT.
04 Net Promoter Score (NPS)
Another customer service KPI you can use is Net Promoter Score.
NPS is a customer loyalty metric that measures how likely customers are to recommend a company’s products or services to others. It is a widely used metric that can indicate how well a company is meeting customer needs and expectations.
NPS is calculated by asking customers a single question about how likely they are to recommend your brand to a friend or colleague. Customers are then classified into one of three categories based on their answer:
- Promoters (9-10 score): customers who are likely to recommend the company’s products or services to others.
- Passives (7-8 score): customers who are satisfied but not particularly likely to recommend the company’s products or services to others.
- Detractors (0-6 score): customers who are not satisfied and are likely to discourage others from using the company’s products or services.
The NPS is then calculated by subtracting the percentage of detractors from the percentage of promoters. So if a company has 50% promoters, 40% passives, and 10% detractors, their NPS would be 50-10 = 40.
A high NPS score indicates that your company has a large percentage of promoters and a small percentage of detractors. It means that customers are generally satisfied with your products or services and are likely to recommend them to others.
A low NPS score indicates that you have a large percentage of detractors. It means that customers are generally not satisfied with what you do and are unlikely to recommend them to others.
05 Customer Retention Rate
In your customer service KPIs, you can also measure Customer Retention Rate.
CRR measures the percentage of customers who continue to do business with your company over a certain period of time. It is a good indicator of how well the organization is retaining customers and the level of loyalty you have.
CRR is calculated by dividing the number of customers at the end of a period (e.g., a month or a year) by the number of customers at the beginning of that period and then multiplying by 100 to get the percentage.
For example, if a company starts a year with 1000 customers and ends the year with 800 customers, the CRR would be 80%.
A high CRR indicates that you retain a large percentage of the customers and that they are loyal to the company. A low CRR, on the other hand, indicates that your company is losing customers and that there may be issues with customer relations.
Improving the retention rate can be achieved by improving customer service, upgrading your services/products, and building a strong relationship with customers. Additionally, regular communication and engagement with customers and addressing any issues or concerns they may have can also help to improve the Customer Retention Rate.
06 Abandonment Rate
To measure the customer satisfaction score, you can also use the abandonment rate KPI.
This metric measures the percentage of customers who end a call or chat with a customer service representative before their issue is resolved. It is typically used to evaluate the efficiency of a customer service team and identify areas where improvements can be made.
The abandonment rate is calculated by dividing the number of calls or chats that were abandoned by the total number of calls or chats received. For example, if your customer service team receives 100 calls and 20 of them are abandoned, the abandonment rate would be 20%.
A high abandonment rate can indicate that customers are not satisfied with the service they are receiving and are ending their interactions with the customer service representative before their issue is resolved. It may also indicate that the process of waiting on hold or navigating through a self-service system is too complex or time-consuming. This can be caused by a lack of training, an ineffective knowledge management system, or even a problem with the customer service infrastructure (e.g., long wait times, poor call routing, etc.).
You can improve this customer service KPI by providing better training, having an effective knowledge management system, and analyzing customer interactions data to identify common issues. You can also analyze if the infrastructure needs optimization to reduce wait times.
How to improve customer feedback?
Customer feedback is extremely important when measuring customer service KPIs. Fortunately, there are many ways you can improve it!
Here are some golden rules you can follow:
- Make it easy for customers to give feedback.
- Use customer feedback tools.
- Act on customer feedback.
- Encourage open and honest feedback.
- Use customer feedback to improve your products and services.
- Reward customers for giving feedback.
- Make it a continuous process.
- Use customer feedback in employee training and development.
- Make sure to ask the right questions.
- Analyze feedback on a regular basis.
How to improve customer satisfaction?
If you measure the customer service KPIs mentioned above, it will be easy for you to address the problems your organization may face. Here’s what you can do to improve the customer satisfaction score even further:
- Actively listen to your customers and try to understand their needs and wants. Respond to their feedback and complaints promptly and take appropriate actions.
- Train your customer service team to provide friendly, efficient, and knowledgeable service. Ensure they have the tools and information they need to quickly and effectively resolve customer issues.
- Continuously improve your products and services to meet the changing needs of your customers.
- Regularly communicate and engage with customers, and address any issues or concerns they may have in order to build a strong relationship with them.
- Provide customers with a self-service channel, such as an FAQ section or a knowledge base, to allow them to find answers to their questions without having to contact customer service.
- Regularly gather customer feedback to understand their needs and identify the areas that can be improved.
- Personalize your approach by using customer data to create personalized experiences and tailor communication.
- Show customers that you care about them by going above and beyond to meet their needs.
- Be transparent about your company.
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Customer service KPIs: Best practices
Here’s what you can do while measuring customer service metrics. These tips will help you achieve your KPIs and gain more satisfied customers.
- Define clear and measurable goals for each KPI, such as a target response time or resolution rate, so that you can track progress and identify areas for improvement.
- Use multiple methods of data collection, such as surveys, customer service logs, and analytics tools, to gather data on customer service KPIs.
- Track and analyze data over time to identify trends and patterns and to make data-driven decisions.
- Involve different departments, such as customer service, sales, and marketing, in the process of measuring customer service KPIs.
- Use a balanced scorecard approach that considers a variety of customer service KPIs, including both quantitative (for example, response time or resolution rate) and qualitative (such as customer satisfaction or loyalty) metrics.
- Regularly communicate and share results with stakeholders and teams, including customer service representatives and managers, to ensure that everyone is aware of performance and progress.
- Continuously improve by using the insights gained from measuring customer service KPIs to identify areas for improvement and make changes to processes and training.
- Use benchmarking to compare your performance with that of other companies in your industry and to identify best practices that can be implemented.
- Be flexible and adaptable, and be willing to adjust your approach as needed based on the results of your KPI measurement.
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