9 Customer Service KPI Metrics You Should Measure to Boost Retention

Once upon a time, people would buy goods or services they needed and go on about their day. Leaving reviews wasn’t a thing. Expecting a company to go above and beyond what you wanted wasn’t a thing. Tit for tat. Transaction completed.

Nowadays, however, customer service is as important as what you’re selling — if not even more. At the end of the day, consumers can likely find a comparable item from elsewhere, but what keeps them coming back (and what makes them recommend a business to their friends and family) is how they were treated throughout the whole process. 

So, other than a client telling you how happy they are with your services, how else can you keep track of customer satisfaction? Fortunately, there are customer service KPIs that you can use to measure success of your customer service efforts, and these can influence how you manage your customer relations. 

What Are Key Performance Indicators (KPIs)? 

The acronym KPI stands for key performance indicator. KPIs act as targets that help you measure progress you're making toward specific strategic goals. 

KPIs are also often referred to as health metrics because they show you how your team is hitting their goals. This is why KPI reporting is so important. With a reporting tool, you can build customizable dashboards to measure the right KPIs. 

For customer service, you track metrics that reflect whether there is any progress toward meeting your business goals in the context of the overall customer experience. While it may be tempting to focus exclusively on costs and profits, customer satisfaction is the foundation for the long-term success of your business. 

Why Track Customer Service KPIs? 

Running a business costs a whole lot of money. You want to make sure that you’re investing it wisely so that you can maximize your ROI. And the only way to know this is by measuring your business’ performance. 

This is where KPIs play a vital role. You can answer all kinds of questions, such as:

• How many new customers are you getting each month? 
• How many customers are returning for repeat business? 
• How much money are you investing on getting new clients and retaining old ones?
• How effective is your current marketing campaign? 
• What’s your conversion rate? 

If something is working, you want to keep doing it. But if it isn’t, you want to cut your losses, and pivot so that you can reap the benefits of all your hard work. 

Customer service is central to how customers perceive your brand – and whether they would recommend you to friends and family.

Nothing in life is perfect, so your customer service team is there to get the customer experience back on track when it goes wrong. When service reps are motivated and informed, they can leave your customers with a positive impression even after a thorny issue.

Like so many aspects of modern business, customer service is driven by data. No one can perfectly measure the rapport customer service reps are able to create, but customer service key performance indicators (KPIs) come in many different forms. Understanding them is essential to customer service leadership.

Any VP of service needs to keep an eye on the big picture, watching where customer service is headed. Not surprisingly, some customer service KPIs are more valuable to this than others.

In fact, customer service KPIs that are crucial at lower levels of the org chart become much less meaningful as you ascend to a strategic role. Many service VPs find there’s a distinct learning curve in figuring out where they should focus their attention after getting promoted.

9 Customer Service KPIs You Need to Watch

1. Customer Satisfaction Score (CSAT)

Customer satisfaction can be tough to figure out because it’s so subjective. CSAT comes into play when you ask your customers to rate their satisfaction on a numeric scale.

Maintain a narrow scale range to minimize confusion: 1 - 3 and 1 - 5 are both common and easily understood. A scale of 1 - 10 saddles each respondent with too much thinking, making scores tricky to compare.

2. Net Promoter Score (NPS)

Net promoter score is one of the most famous customer service KPIs. It poses a simple, yet profound question to each customer: How likely are you to recommend us to your friends?

A score of 9 - 10 indicates a “promoter,” the score you should shoot for, while 0-6 represents “detractors.” Subtract promoters from detractors, and you’ll end up with your NPS.

3. First Response Time (FRT)

Fast customer service is a mark of quality everyone recognizes. In fact, research has shown that customers prefer a quick response to one that’s thorough but takes longer – even if the quick response doesn’t solve the issue. You will have to resolve it eventually, but providing a quick response acknowledging an issue lets the customer feel heard.

Now, it bears repeating that the responses must be helpful. If your customer service reps are reading from a script or providing cookie cutter memorized responses, customers will see right through it, and it won’t matter how fast the responses are coming.

In order to make this process as seamless as possible for customers and for your employees — and to make the metric useful — prioritize customer service training. Make sure your team knows your products and services like the back of their hand and how to conduct basic troubleshooting.

Also provide a thorough knowledge base so that reps can pull up information in a matter of seconds. When all else fails, have reps inform the customer the timeframe within which they can expect an answer and resolution. And when all is said and done, ask customers to rate the experience.

4. Average Handle Time (AHT)

First response times are great, but handling the matter timely is even better. Do both. What would be a good average handle time for your business depends on your industry and the complexity of the issue to be resolved.

When calculating the AHT, add the talk time with any amount of time the customer was put on hold. If the customer had to call several times, add every single call to the total.

If you find that your company’s AHT is too high, look for ways to optimize the experience. Ask the right questions.

Are calls routed to the right department? Are you providing adequate training, tools, and resources to your customer service reps? Are you monitoring calls every now and then?

This last one is a useful tactic to identify recurring issues or to determine whether longer talk times are due to reps building up a rapport with a customer vs. not knowing how to solve a problem.

5. Customer Effort Score (CES)

One of the biggest indicators of good customer service is how disruptive it is for the consumer to reach out to you. Do they have multiple ways of reaching out to your team? Some people prefer email. Others prefer chatbots.

If you only offer a phone number, younger customers, introverts, and ultra busy individuals may loathe you for it.

Is there a lot of back and forth going on, or does a single query take care of the issue? Is the onus of proving a purchase, a previous conversation, a company promise on the customer, or is the rep assisting them able to pull everything up?

All of these factors are huge indicators of whether a customer is happy with their experience with your business. So track it. After helping them out, send them a short survey where they get to indicate whether the process was easy, burdensome, or difficult.

6. Customer Retention Rate (CRR)

It’s not always easy to connect retention rate to customer service interactions. Still, if you drill into the numbers, you may discover a substantial amount of lost customers had contact with your CSRs in the past.

This correlation can indicate service issues that may be marked as complete actually ended unsatisfactorily. But not all is lost. If this is the case, these instances can serve as great learning experiences.

By reaching out to former customers, you accomplish a few important things:

• You let them know that you care about their satisfaction, even after the transaction is complete.
• It gives you the opportunity to fix issues and maybe repair the customer’s trust in you.
• It provides you with the opportunity to identify a problem that maybe you weren’t even aware existed — thus giving you a chance to prevent it from happening again.

7. Service + Quality (SERVQUAL)

This multifaceted customer service KPI aims to capture the subjective elements under the hood of customer service. You ask respondents how their recent customer service experience rated compared to their expectations in five critical areas:

• Reliability: Was the service given accurate and consistent?
• Assurance: Did the employees involved create confidence?
• Tangibles: Did employees and surroundings “appear” professional?
• Empathy: Did employees seem to care and give personal attention?
• Responsiveness: Did employees provide speedy customer service?

SERVQUAL is traditionally captured on a seven-point Likert scale – that’s the kind that runs from “strongly agree” to “strongly disagree.” This will highlight areas of excellence and places to improve. 

8. Employee Satisfaction

Avid Bluleadz readers know about employee engagement: A subjective measure pointing to the motivation and commitment all people need to do their best work.

In general, enterprises with high levels of employee engagement succeed where others don’t. Few other job roles call for high engagement quite like customer service.

When customer service agents aren’t engaged, it shows. They don’t have the energy, focus, or patience to deal with the unpredictable behavior the public can throw at them. 

That means fewer problems are corrected the first time. Issues fester longer, and customers lose faith in your ability to deliver the level of quality they want.

But how do you measure employee engagement? It may be the hardest of customer service KPIs to crystallize.

The easiest way is to consistently survey your employees on their level of job satisfaction. Help them stay at the top of their game by providing them with opportunities to improve their skills.

Factors that can help your team become happier at their job include providing them with the right technologies and resources, giving them the authority to make decisions on their own, and updating processes when they are outdated or unnecessarily burdensome.

Then take some time to conduct one-on-one conversations to check in with them. Encourage open communications, and offer the option of anonymous employee feedback/surveys so that your team feels comfortable being honest.

9. Complaint Rate and Complaint Escalation

If the overall volume of complaints is increasing faster than customer growth, it may point to deficiencies in your product or associated documentation. This signals to leadership it's time to make some changes. 

Meanwhile, if agents have to escalate issues to managers regularly, they might not have the resources to tackle customer concerns. Look at this data closely so you can pinpoint exactly where your agents might be lacking resources. 

Leverage Customer Service KPIs to Improve the Customer Experience

A strong customer experience is the foundation for successful, growing businesses. When your customers love using your products or enjoy your services, they're going to stay longer, repeat their purchases from you, and sing your praises, driving referral business your way.

Needless to say, the impact your customer service team has on the growth of your revenue is huge. Measure the right metrics to gauge the effectiveness of your customer service team and, most importantly, to find ways to improve your service team's processes to directly improve the customer experience and boost satisfaction.