Why track KPIs in your Customer Service department?
Tracking Key Performance Indicators (KPIs) in a customer service department is like having a pulse on the heart of your organization. Customer service is where your business interacts with its most valuable asset – your customers. By monitoring and tracking KPIs, an organization can gain valuable insights into how well their customer service department is performing, and in turn, how satisfied their customers are.
Customer service is a critical function for any business, regardless of size, industry or location. Providing high-quality customer support and resolving issues quickly leads to increased customer satisfaction, loyalty and retention. Tracking key performance indicators (KPIs) for your customer service department is essential to understand how well it is performing, identify areas for improvement and demonstrate the value of customer service efforts to the wider business.
In this extensive article, we will look at the key reasons why tracking KPIs should be a priority for any customer service manager or director. We'll start by explaining what customer service KPIs are, why they are useful and some examples. We'll then go into significant detail on the benefits of tracking CS KPIs across 4 main areas - agent performance, customer satisfaction, issue resolution and department efficiency. Under each of these sections, we will suggest relevant KPIs to track, analyze how to calculate and benchmark them, and discuss why they are important. We aim to be as thorough as possible in justifying the critical need for customer service KPI tracking.
What are Customer Service KPIs?
Let's begin by defining what we mean by key performance indicators (KPIs) for customer service. KPIs are quantifiable metrics used to evaluate and track the performance of a particular business activity or department over time. They enable customer service managers to measure progress towards goals and gain actionable insights to make better decisions.
For a customer service department, KPIs typically focus on the efficiency, quality and speed of support interactions. This includes indicators related to contact channels, agent performance, query and complaint resolution, customer satisfaction, issue types and resolution timeframes. Tracking CS KPIs make it possible to analyze strengths and weaknesses, identify negative trends early and facilitate performance improvements.
Well chosen KPIs for customer service should be:
- Relevant - they measure performance for essential CS activities
- Quantitative - have a numerical value that can be measured over time
- Easy to calculate - data for the KPI should be extractable and formulas simple
- Easy to communicate - metrics should be intuitive and easy for staff to understand
Examples of common customer service KPIs include:
- First contact resolution rate - % of queries resolved in the first interaction
- Average handle time - the average time it takes to handle a customer inquiry
- Customer satisfaction (CSAT) score - a metric for how happy customers are with the support experience
- Wait time/Queue length - how long customers wait to speak to an agent
- Resolution time - how long it takes to close a support ticket
- Repeated contact rate - how often the same query is raised again
Now that we understand what customer service KPIs are, let's look at the key reasons tracking them should be a priority.
Benefits of Tracking Customer Service KPIs
Tracking KPIs delivers powerful benefits for any customer service department. Done consistently over time, it enables:
- Understanding of performance across critical activities
- Insights into strengths, weaknesses and pain points
- Identification of trends and areas for improvement
- Benchmarking against competitors or industry standards
- Demonstrating the value of customer service to the wider business
- Providing metrics for goal-setting and performance management
Let's analyze in detail the value of monitoring CS KPIs across four areas: Agent Performance, Customer Satisfaction, Issue Resolution and Department Efficiency.
1. Monitoring Agent Performance
One of the most important areas for a customer service department is monitoring and enhancing agent performance. How effectively and efficiently agents can resolve customer queries has a direct impact on cost, customer experience and retention. CS KPIs make it possible to track agent productivity, identify high and low performers, and analyze training gaps. They also help agents understand their own performance levels.
Relevant KPIs for agent performance include:
- Average Handle Time (AHT) - The average time an agent takes to handle and complete a customer inquiry, measured from first interaction to resolution. This includes talk time plus any hold time or wrapping up. AHT can be tracked by channel (phone, email, chat etc) and by agent. A decreasing trend indicates agents resolving queries faster. Recommended benchmark is 60-120 seconds for inbound calls.
- Adherence - How well agents conform to schedules and break times. Track % adherence and aim for a high target like 90-95%. Non-adherence can impact service levels.
- First Contact Resolution (FCR) - % of customer inquiries fully resolved in the first interaction without needing callbacks or transfers. Can be tracked by channel and shows agent skill. High FCR is better for customers. Benchmark of over 80% is good.
- Customer Satisfaction (CSAT) per agent - The average satisfaction rating given by customers interacting with each agent. Highlights skill gaps and training needs when agents have low CSAT.
- Repeat contact rate - How often the same customer has to contact again regarding an unresolved query. Low repeat contact rates indicate higher agent resolution skills.
- Utilization rate - % of logged in time each agent spends actively handling contacts vs available/idle. Target 85-90% utilization. Too high can cause burnout.
Tracking these KPIs over time highlights high performers, skills gaps, training needs and opportunities to improve efficiency. Agents should be coached using KPI trends and benchmarks to drive continual improvement.
2. Monitoring Customer Satisfaction
Understanding customer satisfaction levels is critical for any support operation. Customer sentiment has a direct impact on retention, referrals and revenue. CS KPIs make it easy to monitor satisfaction, identify pain points in the customer journey and quantify the impact of process changes.
Useful metrics for tracking satisfaction include:
- Customer Satisfaction (CSAT) score - The widely used CSAT metric measures customer happiness with a support experience on a 1-5 or 1-10 scale. It is captured through surveys after ticket resolution or calls. Aim for excellence of 85-90%.
- Net Promoter Score (NPS) - NPS measures likelihood to recommend on a 0-10 scale. Gathered through customer surveys. 50+ is considered excellent. High NPS correlates strongly with growth.
- Customer Effort Score (CES) - CES rates the level of effort a customer perceives in getting an issue resolved on a scale like 1-5. Low effort leads to higher satisfaction and loyalty. Benchmark is over 4.
- Repeat contact rate - What % of customers have to contact you again about unresolved issues. Lower repeat contact shows higher satisfaction levels. Benchmark depends on business but aim for under 10%.
- Negative social mentions - The volume of complaints or negative feedback on public channels like Twitter and Facebook. Monitor frequently and aim to minimize.
- Customer lifetime value - The revenue generated from a customer over their lifetime. Higher CLV indicates higher satisfaction and retention. Useful to segment by high/low CLV groups.
Tracking customer health metrics helps identify pain points and areas for better customer experience. For example, a drop in NPS may indicate an emerging issue with service quality. Customer service leaders should review satisfaction KPIs regularly and act rapidly on negative trends.
3. Monitoring Issue Resolution
A key objective for all customer service teams is resolving customer issues quickly and effectively. The speed and quality of resolution impacts customer satisfaction and loyalty. Issue resolution KPIs quantify performance levels and highlight areas needing improvement.
Important metrics to track for issue resolution include:
- First contact resolution (FCR) rate - As mentioned earlier, FCR measures the % of queries fully resolved in one interaction. Higher FCR provides better customer experience.
- Average resolution time - The average time taken to resolve customer issues of varying types and severity. Includes total time an issue is open. Faster resolution is better for customers.
- Backlog/Pending tickets - Volume of open tickets that are past resolution time SLAs. High backlogs lead to delays and unsatisfied customers. Keep backlogs minimal.
- Resolution paths/channels - The channels used to ultimately resolve issues like email, phone, chat, self-service etc. Optimizing channel mix improves efficiency.
- Reopened ticket rate - What % of closed tickets have to be reopened due to incomplete resolution. Lower rates equate to higher resolution quality. Benchmark under 10%.
- Knowledge base usage - How often customers self-serve answers from the knowledge base vs needing agent assistance. Higher usage reduces contacts. Target over 20% of users finding answers without contact.
- Issue escalation rate - How often complex issues have to be escalated to higher tiers like supervisors or managers. Lower escalation demonstrates first-tier resolution skills.
By tracking issue resolution KPIs over time, managers can identify spikes in volume, backlogs and delays before customers notice. This enables a proactive response - such as training, new hires or workload shifts. KPIs also help diagnose if channel, tier-1 skill or knowledge gaps are impacting resolution speed and quality.
4. Monitoring Efficiency
A customer support department is a significant expense for any organization. Efficiency KPIs help managers optimize operations, balance resources and capacity, and reduce costs over time. Key metrics for department efficiency include:
- Cost per contact - Calculated by taking total customer service costs divided by total contacts. Reducing this over time improves efficiency and containment of support costs.
- Average handle time (AHT) - As mentioned earlier, AHT is the average time to handle a customer inquiry. Lower AHT leads to higher agent productivity and efficiency.
- Contact deflection rate - % of support contacts deflected to lower cost channels like self-service, chatbots or online forums. Higher deflection reduces contacts and costs.
- Schedule adherence - How closely agents follow their work schedules by minimizing unplanned absence, tardiness and extra breaks. High adherence optimizes staff coverage and service levels.
- Training expense per agent - The overall cost of training each support agent including programs, materials and time. Lower training costs can improve efficiency but shouldn't compromise skills.
- Agent utilization rate - As discussed earlier, the % of logged time agents are actively handling contacts vs idle. 85-90% utilization is optimal for efficiency.
- Overtime rate - How much overtime is worked by agents due to unplanned peaks in volume. This adds costs and overworks staff if excessive. Keep overtime to a minimum.
Monitoring efficiency KPIs helps managers right-size operations, contain costs and maximize productivity. For example, increasing handle times may indicate a need for training or hiring. High overtime can prompt plans to smooth out seasonal peaks. Regular review of efficiency metrics is key to optimizing customer service costs and capacity.
Next Steps
Effective tracking of customer service KPIs across agent performance, customer satisfaction, issue resolution and department efficiency is clearly essential. Leveraging insightful CS metrics leads to tangible benefits for customers, agents and the wider business.
However, tracking KPIs is only the starting point. The real value comes from acting on the trends, insights and opportunities highlighted by the data. Teams should review KPI reports frequently and discuss emerging gaps, issues and potential improvements. Meetings focused on latest service metrics help engrain a data-driven culture.
Based on this analysis, key next steps for managers should include:
- Select and document the top 5-10 KPIs aligned to business goals
- Build dashboards to track KPIs across channels, issue types and agent groups
- Schedule regular review meetings to analyze latest trends and respond rapidly
- Set performance targets and benchmarks based on industry data
- Incorporate KPI performance into agent coaching and development
- Use CS metrics to identify inefficient processes to optimize
- Feed insights from KPIs into strategy and capacity planning
- Report on customer service KPI trends to demonstrate value to the wider organization
The effort involved in gathering, analyzing and acting on customer service KPIs delivers big rewards through higher efficiency, cost savings, customer retention and agent engagement. While tracking too many metrics can become noise, the top 10-15 KPIs that offer greatest insight can transform the performance of any support operation.