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The 7 SMART KPIs for Customer Service To Measure Effectiveness

Key Performance Indicator (KPI) refers to measurable values that gauge your business progress in terms of objectives. Think of KPIs as benchmarks with which to assess whether your business is on the right track or if it could use improvement. Without them, you’re basically winging business management. And that’s not the smartest way to approach your entrepreneurial endeavor. That is unless you don’t mind incurring financial losses you’ll be hard-pressed to recoup.

By monitoring plotted KPIs, you don’t only get to track how you did but you will also be guided on how to move forward. And that’s pretty much what business management is all about.  

Why Setting KPIs Is Important for Customer Service Effectiveness

Customer service is a critical aspect of business management. Poor customer service results in unhappy customers. And that robs you of repeat business which is the fuel that sustains sales, whether you’re dealing in consumer goods or services. You also can’t expect to gain referrals. 

This is where customer service KPIs come in, and they should be tailored fit to your business that has its own peculiarities. The first mistake you’ll make when plotting KPIs is to adopt industry-recognized barometers. Remember that no two businesses are alike, even if they fall within the same category. 

Even more so, no two businesses share the same customers. The key characteristics of these customers may be the same, but your customers deal with your business differently from how they deal with other businesses. 

You must understand your business as well as the behaviors of your customers. Take your understanding to the drawing board and plot KPIs that are clear and succinct. Those requirements ensure that your KPIs will be ready for dissemination while leaving no room for confusion and errors in the application. 

How to Plot SMART KPIs 

To plot effective KPIs, first, you need to ask the right questions. They are as follows:

  • What do you want to achieve?
  • Why is that goal relevant?
  • How do you plan to measure progress?
  • How do you plan to influence this progress?
  • Who is/are the person/s in charge?
  • How frequently do you monitor the goal’s progress? 
  • How can you tell if you’ve reached your goal?

Take, for instance, you want to increase sales. The first order of business is to narrow down your objective. Maybe you want to boost repeat transactions by a specific percentage toward sales growth. This is relevant because you seldom see familiar faces in your shop. Your business mostly relies on new customers. And that’s not sustainable. 

You plan to create a loyalty program to be overseen by your sales front liners. Your goal is to have X number of sign-ups per week. To achieve that number, you have trained your customer service representatives on how to build rapport with customers. Each of them has a quota of sign-ups per week. 

You will monitor the program’s progress every week, with the program lasting for half a year. If you amassed the specified number of participants within that duration, mission accomplished. 

This is just an example of a KPI-guided business objective. Goals differ but the flow of the process follows the same trajectory. 

SMART KPIs to Use

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A SMART KPI should be Specific, Measurable, Attainable, Relevant, and Timebound. Specific means it’s narrowed down to its simplest component. Measurable requires a way to track the goal’s progress with numbers. Relevant means that your goal should matter to you and your business while Attainable refers to the goal being grounded in practicality. Timebound zeroes in on a specific duration. 

Here are SMART customer service KPIs you should adapt.

1. Average resolution time

It can’t be helped. You can’t please all customers. But at the very least, you need to ensure their issues are resolved as promptly as possible. Average resolution time is measured by adding the duration of case resolutions and dividing the sum by the total number of cases.

2. Customer Effort Score (CES)

How long or short it takes to resolve a customer concern is just one of the factors that contribute to whether a customer remains happy with your service. Another barometer is how much effort they had to exert to have their issues addressed. CES is measured by asking customers to accomplish a Likert scale questionnaire.

3. Customer Satisfaction Score (CSAT)

You cannot bide your time. Quickly after a customer’s interaction with your service representative, politely ask them to accomplish a Likert scale questionnaire that measures CSAT.

4. Customer service abandonment rates

Aim for zero customer service abandonment rate. That means you were prompt to respond to all inquiries sent your way regardless of the communication channel used by customers. This is measured by dividing the total number of abandoned chats or calls by the total number of customer service inquiries.

5. Customer retention rate

This metric measures how you’re doing when it comes to repeat transactions. From the total number of customers after a specific period, subtract the sum of new customers. Divide the resulting number by the total number of customers from the beginning of that sales period. If you score close to 1, you retain customers excellently.

6. First response time

This refers to the amount of time your customer service team responds to a customer’s first inquiry. Add the duration within which your representatives respond to all first customer inquiries. Divide the sum by the total number of cases recorded.

7. Sentiment analysis

This is another approach to opinion mining. You listen to the language the customer uses to determine whether the situation is under control or verging toward the negative. You adjust your customer service approach accordingly.

Start Thinking About Your Customer Service KPIs

The ecommerce customer service KPIs you need to plot should be directly informed by your business objectives. These, you can’t do without. Thankfully, it’s not rocket science. If you know where you want to take your entrepreneurial pursuits, you would know what SMART KPIs to monitor. 

Make sure that everyone in your organization is on the same page. Keep in mind that customer service does not only rely on your sales front liners. All systems should be on board, from your inventory management team to your admin staff, and everything in between. 

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