15 Customer Service KPI Metrics You Should Know

Zuzanna Bocian

14 min read

Jul 3, 2024

Have you ever wondered how successful businesses ensure top-quality customer satisfaction? It all begins with tracking the right metrics. But what are these crucial numbers that drive superior service and profitability?

Understanding key performance indicators (KPIs) for customer service is crucial for companies. KPIs help identify strengths and weaknesses in service delivery, make data-driven decisions, and implement strategies to enhance customer experience. Improved customer satisfaction leads to increased loyalty, higher retention rates, and greater profitability.

Moreover, KPIs help streamline business operations by pinpointing areas requiring improvement, optimizing resource allocation, and reducing operational costs. Utilizing these KPIs is essential for any company aiming to deliver exceptional customer experiences and achieve constant growth in a dynamic, ever-evolving market.

Response time metrics

Customers expect quick, efficient service that respects their time and offers timely solutions. Response time is the first touchpoint between a company and its customers, setting the tone of the interaction. Monitoring and optimizing response rate metrics is essential to maintain customer satisfaction and loyalty.

1. First response time (FRT)

The first response time is the time elapsed between the customer submitting an inquiry and the agent responding for the first time. It starts when a customer reaches out through email, phone, chat, or any other channel. You can measure it in minutes, hours, or days and calculate it by using the formula:

Unless you offer support 24/7, measure your response time during business hours. Also, automated responses (from chatbots) should be excluded, and the results should be filtered based on agents, teams, or time zones to find room for improvement.

Strategies to lower your first response times include:

• Train your agents to be up-to-date on the processes that must be followed. Create time frames or SLAs for varying cases and simplify their workflow.

• Reduce multi-tasking and improve the focus of agents through a structured approach. Divide the workflow based on communication channels to increase accuracy and quality.

• Build a comprehensive knowledge base so the agents have relevant information. It’ll save time and confusion while improving first-contact resolution.

• For frequently asked questions, where human interaction isn’t needed, create automated replies and direct users to valuable resources. Prioritize the tasks to focus your team efforts in the right places.

2. Average handle time (AHT)

Average handle time measures the duration of customer service interaction, including all related communication such as phone calls, chat sessions, hold times, and any follow-up actions taken.

A balanced AHT indicates that the customer issues are being resolved quickly and efficiently, contributing to an overall positive experience. To calculate your average handling time, use the formula:

Remember, no universal “good” average resolution time applies to all industries. The optimal time depends on factors like communication medium, type of queries, and agent performance.

To improve the average handle times of your customer service team, try the following:

• Streamline the workflows and standard processes to reduce unnecessary steps and improve efficiency.

• Utilize skill-based routing processes, a well-designed interactive voice response (IVR) system, or automated customer service software to save time and money.

• Invest in employee experience and equip them with centralized information and real-time collaboration tools for personalized customer service performance.

3. Average response time

Average response time measures how long it takes for customer service agents to respond to inquiries. It reflects the overall responsiveness of your team across multiple communication channels.

To calculate it, use the formula:

You aim to keep your response time as low as possible because customers prefer to get out of queues. Don’t make them feel neglected, and ensure the promptness of support staff. Quick responses can also reassure your customers that their issues are being solved and contribute to a positive brand image.

To do so:

• Implement an omnichannel support strategy to bring customer interactions into a single platform. It’ll allow agents to respond promptly, improving customer satisfaction levels.

• Establish clear response time targets based on urgency. Monitor performance and then adjust the targets for consistent responses.

• Create automated canned responses for your web chat, implement AI chatbots, and auto-replies for emails to respond to customer queries promptly.

Quality of service metrics

These KPIs gauge customer satisfaction, loyalty, and overall experience with a company. Enhancing them helps minimize customer pain points and friction in the customer journey, thereby reducing dissatisfaction and churn.

4. Customer satisfaction (CSAT) score

It’s a metric that measures customers’ satisfaction with your product or service. Solicit this feedback from customers through post-interaction surveys or feedback forms. You can ask your customers a simple question and give them a scale or emojis. For example:

• How satisfied are you with our service today?

The choice of scale depends on you, so add some red and green colors for quick interpretation.

With CSAT, you can promptly conduct customer surveys and address concerns. Because the questions are simple and take minimal time, users will respond highly. This allows you to identify trends and areas for improvement while enhancing service quality.

To measure it, use the formula:

While calculating, it’s better to use the two highest feedback values for accurate customer retention prediction. A score range of 75-85% is usually impressive. Analyze this score over time to check the long-term performance.

5. Net promoter score (NPS)

NPS is an excellent metric for customer loyalty analysis and determining whether satisfied customers would recommend your business to friends and family. It categorizes customers and facilitates benchmarking against industry standards and competitors, helping in strategic decision-making.

You can measure the NPS score by asking a question and giving them a scale rating of 1-10. For example:

• How likely are you to recommend us to your family and friends?

Based on the scale, the customers can be divided into:

• Promoters: Customers with a score of 9-10 who recommend your service.

• Passives: Customers with a score of 7-8 with neutral feelings.

• Detractors: Customers with a score of 0-6 who have had a negative experience will share it with others.

You can calculate your NPS score by formula:

A score of more than 50% is usually good, with 75+ being excellent. Remember, these scores vary depending on the industry but provide detailed insight into how happy your customers are. Aim to add satisfied customers and promoters for repeat purchases and business success.

6. Customer effort score (CES)

CES measures how easy or difficult it is for a customer to use your service or get the issue resolved. It analyzes the ease of the customer service experience and is frequently based on a survey asking customers to rate the statement, “The company made it easy for me to handle my issue,” on a scale.

It’s a great way to track customer loyalty over time and identify areas of friction in the customer service department. You can use it immediately after the interaction to determine how effective the process was for the customer.

To calculate your customer effort score, use the formula:

Remember that CES doesn’t provide a complete picture of customer emotions; you should always use it with NPS. Also, there is no definitive industry standard for the score, and you should utilize the direction of your scale to find where your business stands in terms of user experience.

To improve the metric, you can simplify the processes and eliminate unnecessary steps to reduce customer effort. Also, anticipate customer needs and provide quick support to enhance the overall experience.

Efficiency metrics

Efficiency metrics in customer service can help you analyze the effectiveness and productivity of support operations. Also, you can utilize the data to identify potential issues and bottlenecks in meeting your targets. Some of these other customer service KPI dashboard examples are:

7. Resolution rate

The resolution rate measures the percentage of customer issues resolved by customer service within a specific period, such as a day, a week, or a month. This metric reflects the problem-solving skills and effectiveness of strategies within the customer service teams.

A high resolution rate means fewer pending or unresolved issues, higher customer retention, and positive feedback. You can calculate the resolution rate through:

A resolution rate higher than 80% is considered good, while below 70% indicates the need for improvement. Your goal should be to improve the resolution rate without compromising the quality of ticket resolution.

To do so, regularly implement self-service options on the website, support tickets, ticket routing, and backlog cleaning, and share constant updates with customers. Also, customer satisfaction should be ensured to prevent negative feedback.

8. Ticket volume

Ticket volume refers to the total number of customer calls or service requests the support team receives within a specific period. (In HelpDesk, you can always see the number of tickets in the “All tickets” view. Take advantage of this to plan your work and assistance).

The number of tickets you get varies depending on your business size, industry, product complexity, customer base size, seasonal fluctuations, promotions, and external events.

Tracking ticket volume is essential to provide insights into customer demands, staffing needs, support costs, agent workload, and resource allocation. Measure it over time and establish internal benchmarks of a “normal” range.

By monitoring it, you can adjust workflows and anticipate customer trends to improve satisfaction scores and decrease employee burnout. While a high volume of tickets may indicate accessibility and customer engagement, it can also signal potential issues with the product or service.

Also, it may become noisy and require contextualization with other customer service metrics such as customer satisfaction, first response time, and customer growth.

9. Service level agreement (SLA) compliance rate

SLA compliance rate measures the percentage of service requests or transactions meeting the agreed-upon standards. It reflects a company’s operational reliability in service performance and directly impacts customer satisfaction, retention, and business reputation.

The calculation is simple by using the formula:

The aim is to achieve as close to 100% adherence as possible to align with customer expectations and industry benchmarks.

However, only include a few KPIs in the SLA to avoid unrealistic expectations or exposing the business to legal risks. Instead, use it as a customer-facing metric to strengthen business relationships and note the performance of your help desk.

To maintain a higher SLA compliance rate, focus on the following strategies:

• Adjust your metrics to reflect historical data with a specific customer, focusing on accuracy and relevance.

• Create multiple policies based on ticket priorities and urgency levels to define SLA metrics.

• Categorize and escalate tickets appropriately to achieve operational efficiency and maintain SLAs.

• Avoid closing unresolved cases and focus on effective resolution over meeting targets.

• Monitor time of resolution carefully but avoid making it the primary customer-facing metric.

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Engagement metrics

The engagement key performance indicators reflect customer service efforts to improve employee engagement, customer loyalty, and business growth. By optimizing engagement initiatives, you can drive sustainable success in any competitive marketplace.

10. Employee satisfaction (ESAT) score

Employee satisfaction metrics reflect the morale of customer service employees. They’re typically measured through surveys or feedback mechanisms to understand employees’ perceptions of their work environment and job satisfaction.

ESAT functions similarly to the CSAT metric but focuses on employee satisfaction within other company departments. Employees are asked to rate their satisfaction with the organization using the following questions:

Survey question: “How satisfied are you with the organization you work for?”

Employees can rate their experience on a 5-point scale, where one means “very dissatisfied” and five means “very satisfied.”

Then, to calculate the ESAT score, use the formula:

A higher ESAT score, closer to 100, indicates a more satisfied workforce, leading to increased motivation, morale, and goal attainment. It also correlates with improved service quality, productivity, and employee retention.

11. Customer retention rate

Customer retention rate measures the percentage of customers a company retains over a specific period. For example, we are starting the year with ten customers and losing two results in an 80% retention rate.

It’s similar to entertaining guests at a dinner party: a better experience means guests stay longer. However, as the party (or customer base) grows, it becomes challenging to assess retention accurately. Retention rate helps businesses measure how well they retain customers, accounting for the starting number, ending number, and any new customers gained.

Steps

• Identify the time frame by determining whether you measure retention annually, quarterly, monthly, weekly, or even daily.

• Gather data by collecting the number of customers at the start (S) and end (E) of the period, as well as the number of new customers added during the period (N).

• Apply the formula and get the retention rate percentage.

High retention rates signify customer loyalty, satisfaction, and ongoing value of the company’s products or services. Also, retaining existing customers is more cost-effective than acquiring new ones, leading to improved lifetime customer value and profitability.

12. Conversion rate

Conversion rate measures the rate at which inquiries or support interactions lead to sales or desired actions, such as signing up for a service or purchasing.

High conversion rates directly impact revenue generation, profitability, and business growth. They also reflect the ability of the customer support team to engage customers, address concerns, and influence purchase decisions.

Some key actions for conversions include:

• Registering on the website

• Providing contact details for lead generation

• Making a purchase

• Submitting a form

• Calling the business

• Downloading a document or template

• Signing up for a subscription

You can calculate it by using the formula:

social proof, displaying clear contact information, using compelling headlines, offering incentives, providing guarantees, and removing distractions.

Financial metrics

Financial metrics in customer service are essential for understanding the cost-effectiveness and profitability of support operations. You can optimize your performance and ensure business growth through customer experience management.

13. Cost per contact

Cost per contact calculates the average cost incurred for each customer interaction the customer service team handles. This metric helps organizations understand the financial efficiency of their customer service operations.

It also helps identify areas where cost savings can be achieved without compromising service quality. You can benchmark it against industry standards and improve your budgeting and resource allocation.

The components of costs include:

• Labor costs: Customer service staff’s wages, benefits, and training costs.

• Infrastructure costs: Rent, utilities, and maintenance expenses.

• Software costs: Investments in CRM systems, call center software, and communication tools.

Also, the cost per contact metric depends on various metrics, including:

• Volume of contacts: High call volumes can reduce the cost per contact through economies of scale.

• Complexity of contacts: More complex issues increase costs due to longer resolution times.

• Agent efficiency: Well-trained agents handle contacts more efficiently, reducing costs.

• Technology utilization: Advanced technologies streamline operations and lower costs.

Understanding and optimizing the cost per contact can balance your budget constraints. You can utilize technology, improve agent efficiency, and refine processes to reduce costs and improve customer interactions, leading to operational efficiency and profitability.

14. Customer lifetime value (CLV)

Customer lifetime value represents the total net profit expected from customers throughout their entire relationship with a company. It considers initial purchases, repeat purchases, and the average duration of the customer relationship.

The key components of CLV include:

• Total average revenue generated by a customer.

• Total average profit derived from the customer relationship.

• Breakdown of CLV by customer segments for enhanced insights.

The metric allows businesses to make informed marketing and sales decisions. It also provides insights into long-term profitability and growth potential and can evaluate the effectiveness of marketing strategies and customer retention efforts.

15. Churn rate

Customer churn rate is the percentage of customers who stop doing business with a company over a specified period. This critical metric highlights areas for improvement and can be tracked annually, monthly, weekly, or daily.

High churn rates indicate dissatisfaction and can negatively impact revenue and growth. Reducing churn is more cost-effective than acquiring new customers and leads.

Some tips to reduce your churn rate include:

• Focus on understanding and meeting customer needs to improve satisfaction.

• Use metrics and patterns to identify and target customers likely to churn with special offers.

• Implement loyalty programs and personalized customer experiences to build long-term relationships.

• Reward loyal customers with discounts, special prices, and cross-selling or upselling opportunities.

• Invest in customer experience and use CRM tools to provide outstanding, personalized customer service.

Summary

Customer service KPI metrics are essential for customer satisfaction and business success. Continuously monitoring these metrics can help keep your customers engaged, optimize operations and service delivery, gain insights into the customer experience, and identify improvement areas.

HelpDesk is vital in this process as it offers robust ticket management, facilitates issue resolution, and enables asynchronous communication through various channels. It streamlines support operations with automation and AI-based features, collects and analyzes customer feedback, and supports proactive outreach efforts.

By combining these powerful KPIs with the efficiency of HelpDesk software, you’re not just improving customer service—you’re creating a loyal customer base, enhancing operational efficiency, and driving your business toward greater profitability.

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