Customer Service

Customer Service KPIs and Metrics You Need To Measure for Success

August 23, 2021
12:00 am

Want to improve customer service? Then you need to measure the right metrics. To help, we compiled a list of 12 incredibly useful customer service KPIs you need to start tracking for your business.

Generally, customer service KPIs can be useful for:

  • Strategic opportunity: what to improve in your product, CS processes, and more.
  • Efficiency: your team or individual productivity.
  • Customer satisfaction: how strong your company’s relationships with customers are.

So, key performance indicators (KPIs) have various good uses. It’s down to you to use each customer service performance metric in a way that works best for your business.

Customer service KPIs performance metrics by company area bar chart illustration
Customer service performance metrics by company focus.

Let's get started.

  1. Net promoter score (NPS)
  2. Customer retention rate (CRR)
  3. Net retention rate (NRR)
  4. Gross retention rate (GRR)
  5. Conversion rate
  6. Average resolution time (TTR)
  7. First-call resolution (FCR)
  8. Customer satisfaction (CSAT)
  9. Social media monitoring
  10. Customer engagement metrics
  11. Active users
  12. Conversation abandonment rate

1. Net Promoter Score (NPS)

Net Promoter Score (NPS) reflects how likely customers are to recommend your company to others. Essentially, it’s a proxy for customer satisfaction and brand loyalty.

NPS surveys can be administered via pop-up or email. Customers are asked “How likely is it for you to recommend us to someone else?” and can reply on a scale from 0 to 10. Based on their answer, customers are classified as promoters (9-10), detractors (0-6), or passives (7-8). 

You can also ask for feedback on their score, plus follow-up questions. This will give you a better understanding of your customer's perspective.

How is Net Promoter Score calculated?

Net Promoter Score is the percent of promoters minus the percent of detractors, which can be a number between -100 and +100.

How to calculate net promoter score formula with ranges
Net promoter score formula with classification scale.

Track your scores internally over time and, if possible, compare your scores to averages in your industry or direct competitors. For example, you can use benchmarks like the one below; a breakdown of NPS scores in different sectors:

Example of industry ratings in a net promoter score breakdown
Breakdown of net promoter score by industry.

Usually, if your company has more promoters than detractors, it’s good news. But, a really encouraging NPS score would be above 50.

NPS is still only one metric, though. It's best to use it as a guide to dive deeper into performance.  Don’t get hung up on the numbers like “we have an average NPS of 70 percent”.

Also, use qualitative customer feedback as part of your customer service KPIs to help you improve NPS.

2. Customer retention rate (CRR)

The CRR of a specific period is the percentage of customers you retained from the beginning of the period to the end. This excludes all customers you acquired within that period.

To measure Customer Retention Rate (CRR), you will need three key numbers:

  • New customers in a given period
  • Customers at the start of that period
  • The total customers at the end of that period

Here's the Customer Retention Rate formula:

CRR can be calculated by taking customers at the end of the period minus new customers divided by customers at the beginning of the period multiplied by 100%.

How to calculate customer retention rate formula
Formula to calculate customer retention rate.

The closer this customer service KPI is to 100 percent, the better.

Ensure you are retaining customers through multiple periods and cultivate customer loyalty.

3. Net retention rate (NRR)

NRR measures your revenue at the end of a specific period from existing customers (including upgrades) after all churn and downgrades have been accounted for.

Here's the Net Retention Rate formula:

NRR is calculated by taking revenue plus upsells plus cross-sells minus downgrades minus cancellations divided by revenue multiplied by 100%.

How to calculate net retention rate
Formula to calculate net retention rate.

You can track this metric both monthly and annually.

Generally, if NRR is higher than 100 percent, it means your business more than makes up for customer churn by acquiring new revenue from existing customers. If it’s less than 100 percent, then you’re losing business.

For reference, the median net retention of publicly traded software companies was 104.0 percent in 2018. 

Let's continue this customer service KPIs list...

4. Gross retention rate (GRR)

GRR shows you what percentage of revenue you’ve managed to keep from existing customers. That's without counting any additional revenue from upsells and cross-sells.

Here's the Gross Retention Rate formula:

GRR is the revenue at the beginning of a period minus the lost revenue from churn in that period, divided by the initial revenue multiplied by 100%.

How to calculate gross retention rate formula
Formula to calculate gross retention rate.

The same calculations apply to the annual GRR or comparing GRR between the same month year over year, as described for NRR. 

Optimal rages for gross retention rates per business size
Optimal rages for gross retention rates per business size

Your GRR can go up to 100 percent, meaning you retain all customers and there are no downgrades in a given period.

5. Conversion rate

Conversion rate shows the percentage of users completing a desired action such as booking a demo or purchasing a product.

Addressing CR can save you big time when it comes to paid advertising. It will help you discover your ideal customers and this will translate into the ability to further refine your marketing.

How do you calculate conversion rate?

The conversion rate is calculated by taking the number of sales divided by the number of visits multiplied by 100.

How to calculate conversion rate formula
Formula to calculate conversion rate.

Say an eCommerce site receives 200,000 visits in October. During that month, 4,000 users purchased online. Then, the conversion rate is: 4000/200000 * 100 = 2%.

Pro tip: If your conversion rate seems low or not reaching your marks, check out these 7 effective ways to increase conversion rates.

Conversion rate is one of the most popular customer service KPIs.

6. Average Resolution Time (MTTR)

Also called “mean time to resolve (MTTR)", time-to-resolution (TTR) helps companies track the aver­age time it takes to solve customer issues.

TTR is normally mea­sured in hours or days, depending on the nature of the business. It takes into account the handling time elapsed from the moment a query comes in, to the time it gets resolved and closed.

Customer support teams are tasked with keeping TTRs short because that corresponds to better customer experiences.

Customer satisfaction decreases as time to resolution increases graph illustration
As time to resolution increases, customer satisfaction decreases.

Here’s the Mean Time to Resolution formula:

MTTR is all times to resolution divided by the number of cases resolved.

How to calculate mean time to resolution formula
Formula for calculating the mean time to resolution.

Thankfully, you don't have to track this manually. With customer support software, time to resolution per agent is tracked automatically, among other customer service metrics.

This will help you see whether there are some customer service agents that take longer than others. Then you can dig deeper to see whether these support agents need more training or if they happen to take over the more complex customer issues.

Pro tip: creating a customer service knowledge base will free up agents and improve TTR.

7. First call resolution (FCR)

First call resolution (FCR) refers to the number of times that an agent was able to resolve an issue on the very first call. Or, if you have an omnichannel contact center, the very first interaction or “contact.” 

Here's the First Call Resolution formula:

The first call resolution rate is the number of customers who had their issue resolved in one interaction divided by the number of customers who called in, multiplied by 100%.

How to calculate first call resolution rate formula
Formula to calculate resolution rate.

Your customer service teams can internally decide on the nuances of calculating this rate, like whether abandoned or escalated calls should count. Or, what is the period of time that should pass before you count a call in your FCR. Once you decide on the exact definition, make sure it stays consistent over time.

The higher the FCR the better. Thirty-three percent of consumers (the biggest group) indicate that resolving their issues in one interaction is the most important part of a good customer experience. 

Top 5 reasons to improve first contact resolution infographic
Infographic depicting the top 5 reasons to improve FCR.

One way to get data on first call resolution is through customer surveys. Customers can tell you directly whether their issue was resolved and after how many interactions. 

You can also use tracking capabilities in your technology solutions such as customer support analytics or repeat call trackers.

Here's some customer service KPIs you've probably heard of.

8. Customer satisfaction (CSAT)

Customer satisfaction reflects the level at which a customer is satisfied with a product, service, or experience.

Creating new customers costs at least 5 times more than retaining existing ones. This means a satisfied customer saves you money.

Customer satisfaction ratings over the last 4 months bar graph illustration example
Acquire's customer satisfaction scores over the last 4 months.

To obtain a customer satisfaction score means creating CSAT surveys. Effective surveys contain an average number of 5 to 10 questions relating to customer experience, service delivery, and measure overall satisfaction.

How to calculate your customer satisfaction score:

Customer satisfaction can be calculated by taking the number of positive responses and dividing by the total number of responses.

How to calculate customer satisfaction score formula
Formula to calculate customer satisfaction.

For example, if 85 of your 100 responses have a rating of 4 or 5 out of 5, your CSAT score would be 85.

To administer an effective CSAT survey, research the best survey questions to ask customers.

9. Social media monitoring

Monitoring your social media means observing social media platforms for brand mentions, competitors, or general industry trends.

Examples of social media monitoring can entail:

  • Online Analytics: Social media analytics tools collect data from social networking platforms like Facebook and Twitter, blogs, comment pages, and news feeds on media sites.
  • Buzz Analysis: Monitor online sources like internet forums, social networks, and blogs.
  • Social Media Intelligence: SMI refers to tools that help you monitor social media channels and interactions. Social media intelligence is gathered from social media sites, using both intrusive and non-intrusive means, from open and closed social networks.

Pro tip: You can even use social media for customer service.

10. Customer engagement metrics

The engagement of customers start from the first touchpoint and incorporates all interactions, including the time customers spend with your brand and the actions they take throughout their journey.

These engagement metrics measure service accessibility and the quality of customer experience. For example, activation rate is triggered when a visitor takes a specific action and becomes an active user. 

How do you calculate activation rate?

Activation rate can be calculated by taking the number of user sessions divided by the number of activities completed by users.

How to calculate activation rate formula
Formula to calculate activation rate.

To do this correctly, try the following:

  • Identify and define your activation events. Only some actions reflect the fulfilment of business goals; payment, upgrades, etc.
  • Understand which actions represent key phases in your customer journey lifecycle.
  • Identify the patterns of a converted user, and figure out their actions.
  • Simplify steps in the activation process.
  • Re-engage users.

Pro tip: adding live chat software can measure customer engagement, the total number of chats, and top-performing agents.

Almost done with our list of customer service KPIs, keep reading...

11. Active users

What are active users? They're users interacting with your business within a specific period. Active users give a clue to the success of your customer service approach.

As this is a broad definition, it may be more practical to break it down, considering every important point on the customer journey.

Here's a checklist you can use:

  • Check the number of login attempts since the day of sign up.
  • Monitor the bounce rate.
  • Uncover the number of calls from users or conversations they had with your agent.
  • Define the characteristics of an active user. A third-party app or an e-commerce store is a potential characteristic of an active account.

Daily, weekly, and monthly active users indicate who is actively using your product or service in a given time period.

And now onto our final metric of customer service KPIs.

12. Conversation abandonment rate

The conversation abandonment rate shows abandoned interactions across multiple platforms. These abandonments provide invaluable insights into customer behavior.

Segment customer conversation by channels and consider whether they are text-based or voice-based.

Segmenting text-based conversations on the basis of channel helps you get insights like number of customer requests per channel or how many agents are needed to handle a particular channel and meet KPI and SLA requirements.

How do you calculate conversion abandonment rate?

Conversion abandonment rate can be calculated by taking the total number of completed transactions divided by the number of initiated checkouts, subtracting it from 1, and multiplying it by 100.

How to calculate conversion abandonment rate formula
Formula to calculate converson abandonment rate.

Calculating voice-based customer conversations helps you analyze:

  • Total volume of voice-based customer requests
  • The typical length of conversations and cost attached.
  • The typical response time of agents.
  • First contact resolutions.

Metrics to measure customer success infographic

Key metrics to measure customer success infographic
Infographic displaying 6 key metrics to measure customer success and how to calculate them.

You can't improve what you can't measure

It’s useful to know the formulas and definitions of KPIs for customer service to help you measure customer service success. But, remember to evaluate each metric both by itself and in relation to other relevant metrics.

At the end of the day, customers expect a great experience. Keeping a keen eye on customer service KPIs will help you see what works and what can be improved.

Which one of these customer service metrics does your business prioritize?

Let us know in the comments.


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