‘The goal as a company is to have customer service that is not just the best but legendary’ – Sam Walton

Wise words. But how do you achieve that kind of elevated service?

Measure, measure, measure. Without measuring customer service performance, you can't know or understand how you progress.

Key Performance Indicators (KPIs) are your friends. Each metric has its specific uses. It’s down to you to employ each of them in a way that works best for your business.

Setting up customer service KPIs

KPIs help you measure performance versus set goals.

For example, our research of customer service insights shows that increasing customer engagement by 50 percent leads to 80 percent improvement in customer retention. It might then be sensible to focus on setting customer engagement benchmarks to achieve higher retention rates.

Customer service KPIs can identify issues you need to address. Measuring customer satisfaction across multiple touchpoints, for instance, may reveal phone users are the least satisfied, whereas those using live chat are extremely satisfied. It'd then make sense to incorporate live chat across all possible touchpoints and encourage phone users to try live chat where they are likely to have a better experience.

Which KPIs are useful to measure customer service performance?

1. Net Promoter Score

Net Promoter Score (NPS) is an index ranging from -100 to 100, measuring your customer's willingness 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.

How is NPS calculated? Customer feedback ratings are categorized as intopromoters, passives, and detractors.

On a scale of 0 to 10, customer ratings between zero and six are categorized as detractors, seven and eight, as passives, and nine or ten, as promoters.

Net Promoter Score = % of promoters - % of detractors.

Track your NPS periodically to see how your customers see you over time – and take actions to improve the score.

2. Customer retention

Customer retention programs must aim to retain the maximum number of customers.

This effort starts on the very first contact and runs throughout the relationships lifetime.

To measure Customer Retention Rate (CRR), you will need three pieces of information:

• Number of new customers in a given period (N)
• Number of customers at the start of that period (S)
• Number of customers at the end of that period (E)

Here’s a handy formula to measure CRR:

Customer Retention Rate = ((E-N)/S)*100

Even a 1 percent improvement in retention means a 5 percent profit increase per customer. Very nice. It’s easy to see why every organization must do what they can to maximize customer retention.

3. Conversion rate

This customer service KPI shows the percentage of users completing a desired action (e.g. booking a demo or clicking on a link).

I can't even tell you how crucial conversion rates are for any business. Effectively addressing CR can save you big time when it comes to paid advertising and it will help you discover your ideal customers. Better customer knowledge means the ability to further refine your marketing.

Conversion Rate = Number of Sales / Number of Visits x 100

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%.

4. Average Resolution Time

Time-to-resolution (TTR) allows companies to 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 time elapsed between the original request log and its closure.

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

How is Average Resolution Time is calculated?

Successful customer-oriented organizations incorporate strategies to minimize average resolution times at their very core.

5. Customer satisfaction surveys

Creating new customers costs at least 5 times more than retaining existing ones. This means that keeping customers satisfied saves you money. On the flipside, unhappy customers are a problem. Why would they want to continue using your product or service?

And to obtain accurate satisfaction data means creating CSAT surveys (as they're called).

Effective surveys contain 5 to 10 questions relating to customer experience, service delivery, and measure overall satisfaction. Send emails to customers, linking to surveys, or even embedding them directly in the email.

For example, check out this Amazon customer satisfaction survey:

Rate your recent Amazon experience and discuss with friends

• Extremely helpful
• Very helpful
• Somewhat helpful
• Not very helpful
• Not at all helpful

6. Social media monitoring

Monitoring tools help you understand what people are saying about you on social media. Available in the market are the likes of Keyhole, Addict-o-Matic, CyberAlert, Sysomos among others.

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 allowing companies to 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.

7. Customer engagement metrics

Customer engagement starts from the first touch point and incorporates all interactions, including the time customers spend with your brand and the actions they take throughout their journey.

Customer engagement metrics are effective in measuring service accessibility and the quality of customer experience.

For example, activation rate is triggered when a visitor takes a specific action and become an active user. This trigger could be time on the website, pages viewed, downloads, subscription, or even trial signup.

How do you calculate activation rate?

(#) of user sessions / (#) activities completed by users = (%) Activation Rate

To do this correctly, try to:

• Identify and define your activation events. Only some actions reflect fulfilment of business goals; payment, upgrades, etc.
• Understand which actions represent key phases in your customer journey lifecycle. User actions should be:
  • Meaningful in terms of value.
  • A pivotal point or process in your sales cycle.
  • A one-time event or instance.
• Identify the patterns of a converted user, and figure out their actions. Record this and define as an activation event.
• Simplify steps in the activation process. Create a one-step sign-up process if possible.
• Re-engage users. Good support drastically improves the activation rate. Segment users who’ve recently signed up or left your site without making purchasing and prioritize them for support.

8. Monthly/daily active users

Active users give a clue to the success of your customer service approach. Daily, Weekly and Monthly Active Users indicate who is actively using your product or service in a given time period.

Who exactly are active users? They are users interacting with your business within a specific period. 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.
• Check the bounce rate.
• Check the number of calls from user 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.

Consider using D1, D7 and D30 metrics, to see who has gone inactive since the onboarding process. Particularly 1 day, 7 days and 30 days after signing up or installing your app. A customer survey at these critical points will glean valuable information for your customer support approach.

Pro tip: Segment out fake users. Suddenly getting an unrealistic number of signups a day may mean some of them are spam. Make sure you clean up your data frequently.

9. Conversation abandonment rate

One of the most important yet overlooked customer service metrics, is conversation abandonment rate. It shows abandoned interactions across social media, phone calls, live chat, and email.

These abandonments provide invaluable insights into customer behavior.

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

Segmenting text-based conversations on the basis of channel help analyze:

• The number of customer requests per channel.
• How many agents are needed to handle a particular channel and meet KPI and SLA requirements.
• The number of concurrent requests an agent is capable of handling.
• Any requirement to add an extra channel.
• The nature of the inquiries; perhaps they can be handled with automation.

Calculating Voice-based customer conversations helps you analyze:

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

You can't improve what you can't measure

These metrics will help you measure customer service success. At the end of the day, you care about providing great customer experience. Keeping a keen eye on these customer service KPIs will help you measure customer service and identify what can be improved.