11 Crucial Customer Service KPIs You Need to Track in 2022

Customer service is hard. Measuring the value of good customer service is even harder. However, only if you have quantifiable data on how well your support team is doing can you improve existing processes, make better staffing decisions, and ensure customer happiness.

The best way to get these insights is by measuring customer service key performance indicators or customer service KPIs.

In this article, we’ve covered everything you need to know about customer service key performance indicators. Skip to the section that you’re most interested in reading using the links below:

Let’s dive right in.

What are customer service KPIs?

Customer service KPIs are quantifiable values that help support teams measure performance and progress against their goals.

Customer service KPIs help you analyze how you’re going in terms of your team, customers, and business goals and arrive at meaningful insights. For instance, by measuring the right customer service KPIs, you can answer important questions including:
– How well is my support team handling customer problems?
– Are customers happy with the quality of service they’re getting?
– What impact does good customer service have on my business as a whole?

How are customer service KPIs different from customer service metrics?

In essence, a KPI is a measurement that can point to how well a team is tracking toward its targets. A KPI is a metric, but it differs from a regular metric in the sense that it shows progress towards a key business goal. 

If a customer service metric doesn’t directly affect progress toward a business goal, then it’s just a metric, not a KPI. For example, a business goal or objective might be to decrease customer churn. A KPI related to this goal could be measuring customer satisfaction following service interactions or the number of issues resolved in the first contact.

With a clear understanding of what KPIs mean, let’s next look at the critical KPIs for customer service.

What are the most important KPIs for customer service?

In contact centers, KPIs are of three types. Each type contains a suite of metrics that evaluate either the team’s performance, customers’ satisfaction, or the subsequent business impact. While there might be different types, you’ll notice that the metrics for each kind are closely intertwined and influence each other.

Here’s an analysis of the different types of customer service KPIs in detail and a list of the essential support metrics to track under each category.

Team performance KPIs

As the name suggests, these KPIs give you deeper insights into your support team’s performance. Poor team performance can impact customer satisfaction and business goals, such as increasing customer retention and improving operation efficiency.

So you can use these metrics to increase accountability among your support agents, motivate them to perform better, and also evaluate the performance of new tools and processes introduced to up your customer support game.

Here are the important customer service team performance metrics that fall under this category:

#1 First response time

Definition: The time taken to reply to the customer for the first time after a ticket has been created.

The first response time has an overbearing impact on customer satisfaction, making it an important KPI for most businesses.

Screenshot with impact of response time on CSAT

This metric is also a highlighter of your ticket assignment rules. Manually assigning tickets can take up a lot of time and effort, and asking agents to take up tickets can lead to cherry-picking. So you need to opt for an efficient alternative system such as automatic ticket assignment.

To add on, you can get insights about agent brandwidth by taking a look at this metric against the total number of tickets (more on this later). If you have a high number of tickets resolved per month, and a high first response time, then you need to work on easing agent bandwidth.

#2 Average handle time (AHT)

Definition: The average amount of time an agent takes to handle a customer’s issue from the beginning of the customer conversation to the last activity that is performed and until the case is closed.

Businesses work on improving this metric to increase customer satisfaction scores, boost team efficiency, and reduce support costs. The lower the metric, the more efficient a contact center operates.

Here are a few benchmark AHTs across different industries:

Screenshot of industry benchmarks for average handle times

A high average handle time can be traced back to poor product knowledge, inefficiencies in internal processes, and can go up to more significant business decisions such as investing in the wrong support tools. 

#3 Resolution SLA

Definition: The percentage of tickets resolved before the specified SLA.

Today’s customers prefer getting quality, personalized, and seamless customer service, even if they have to wait for a bit. However, it’s important to make sure that the resolution time is consistent and is not unacceptably long. Here’s where the resolution SLA comes into play as an important KPI since it helps ensure that all tickets are resolved within a set time.

Every 10% drop in the resolution SLA brought down CSAT by a whole percentage point.1

The fix to a poor resolution SLA lies in equipping agents with better training and resources to handle complex customer issues. As a last resort, you can revisit your SLA strategy and ensure the deadlines are achievable.

#4 First contact resolution

Definition: The percentage of tickets resolved within the first support interaction.

Nothing makes customers happier than finding the right solution in the very first customer support interaction. 

In fact, every 1% increase in first call resolution sees a 1% rise in CSAT score. Plus, low-effort resolutions also drive loyalty and customer retention, with 61% of customers who’ve had their problems resolved with less effort choosing to stay with the company. It goes without saying that this metric is a vital KPI for businesses focussed on keeping customers happy.

Improving training, quality of support, and revising customer service policies can help with improving FCR.

#5 Number of resolved tickets/month

Definition: Total number of tickets resolved every month.

Ensuring that this metric does not see a sporadic trend is important since every 100 extra monthly tickets per agent (or 20 additional weekly tickets) can lead to a 1% drop in CSAT scores.4

Screenshot with impact of ticket volume on CSAT

The number of tickets resolved per month also acts as a fair judge of an agent’s productivity, if you follow a system where certain types of tickets are assigned to a particular agent. For instance, how-to tickets are mapped to agent 1, and tech support tickets to agent 2, and so on.

However, if that’s not the case, then it’s important not to associate the number of tickets resolved per month directly with an agent’s capability since each ticket can be of varying difficulty.

Instead, you can club this metric with other metrics like resolution SLA or average handle time to understand the capacity of work an agent can handle without compromising on quality or speed.

Customer satisfaction KPIs

Customer satisfaction is a measure of how pleased your customers are with the quality of service provided. A common method that businesses use to determine this is by sending surveys to customers after every support interaction. By analyzing the responses on the surveys and gathering feedback, you can spot what’s working and what needs to be improved to provide better service experiences.

The most popular customer satisfaction KPIs are as follows:

#6 Customer satisfaction score (CSAT)

Definition: The percentage of customers who gave a positive response to the satisfaction survey sent to them.

Most businesses focus on improving their CSAT scores since it’s an important indicator of the customer experience. A 10% increase in a company’s CSAT score can lead to a 12% increase in trust from customers.5

Factors affecting customer satisfaction, an important customer service KPI

While improving customer satisfaction requires a lot of moving parts, the ones in your control are employee behavior and knowledge, as well as the quality and speed of service. And like we’ve seen before, speed of service largely affects customer satisfaction.

So if your CSAT score is low, then going back to improving your response and resolution times might be worthwhile. Boosting employee behavior and knowledge and bringing down wait times can be done through consistent training and improving agent enablement.

#7 Net promoter score (NPS)

Definition: A 10-point scale that measures your customer’s willingness to recommend your product or service to others.

Businesses across the world including the likes of Amazon and Apple measure NPS as their KPI since it’s an indicator of a customer’s loyalty towards a brand.

Customers answer this question in retrospect of their entire experience with your brand. So, the customer service department needs to focus on keeping the other KPIs in check, and creating consistent and effortless customer service experiences can help with improving your NPS.

#8 Customer effort score (CES)

Definition: The rating given by customers from 1-10 is based on the difficulty of an experience.

CES is an important metric that businesses track to ensure they deliver a seamless experience to customers.

Image with the benefits of measuring CES by Gartner Research

The solution to improving your CES can range from being more accessible on different channels, offering intuitive self-service options, providing multilingual support, and improving agent training.

Business-level KPIs

Business-level KPIs tell you how customer service impacts the overall health of your business. You can use them to make strategic decisions that will improve the quality of service and impact revenue positively.  

For example, consider a business metric like customer churn rate, which measures how many customers you have lost over a period of time. If you identify customer service as one of the reasons for high churn, you will need to make significant changes to your support setup. You may have to hire new managers with a diverse skill-set, invest in a full-fledged help desk system, and set better long-term goals.

Here are some business-level KPIs concerning customer service:

#9 Customer retention rate

Definition: The percentage of customers you retain over a period relative to the number of customers you start with at the beginning of the period.

Customer retention can boost your revenue by increasing the lifetime value of your customers. A mere 5% increase in customer retention can boost your revenue by 25-95%.6 To add on, your chance of selling to an existing customer is between 60–70%, compared to 5–20% for a new customer.7

While product quality is a variable that significantly impacts this metric, customer support plays a major role in fostering customer relationships and ensuring that customer issues are addressed before they escalate. Focussing on offering tailored solutions on time can help with improving customer retention.

#10 Customer churn rate

Definition: The percentage of customers you’ve lost or retained over a specific time period.

Reducing customer churn is a crucial aspect of business success that requires constant customer engagement to understand and address customers’ issues with your brand and product. It goes without saying that the onus of doing that lies with the customer support team.

#11 Customer lifetime value (CLV)

Definition: The repeat purchase rate of customers over the lifetime of their time with your brand.

This metric is tied to a business’s revenue goals since it helps get insights about revenue potential and planning for the longevity of a business.

It works like this: The longer a customer stays with your business, the more revenue for your business, and you can also spend less money on getting new customers by focusing on your existing ones.

As discussed before, customer service plays an important role in strengthening customer relationships, making this an important KPI for support teams as well.

With the CLV, we commence the list of important customer service KPIs. You might be wondering if you should measure all the metrics listed here? Well, no.

The key to effectively measuring customer service performance is not to measure all industry-recognized metrics. You need to track a set of customer service KPIs that align with your business goals and team objectives. Here’s how you can do that.

How to set KPIs for your customer service department?

Below are six simple steps to help you set the right KPIs for your customer service departments and arrive at the metrics you need to measure.

#1 Understand business goals

Every KPI that you set should tie back to a specific business outcome that can be quantified. So start by taking a look at your business’s goals and work forward from there.

For example, for a business with a goal of improving responsiveness, a KPI around time to first response would be fitting. For one more focused on quality, a KPI around customer satisfaction would work well. Or, for a team aimed at providing an effortless experience, a customer effort score would be a great guiding KPI.

While others might be tracking first contact resolution or handle time, if these don’t relate to a team’s support philosophy or goals in a meaningful way, then it’s best not to make them into KPIs.

#2 Outline team objectives

Along with being meaningful and relating to business values and goals, KPIs must be selected and structured in ways that make them effective for your team.

What is your team’s objective? The answer to this lies in finding out what you want for your team and what your team wants from you. This could be increasing ticket deflection, reducing resolution time, and upskilling.

For KPIs to be effective motivators, there needs to be widespread buy-in from the team. So, involving your team from the start increases the likelihood of buy-in. Team members have a wealth of knowledge that can be tapped to understand what’s important to customers and what’s achievable.

#3 Frame KPIs

Once you’ve identified the business goals and team, you need to frame KPIs.

The best way to frame your KPIs is to be SMART about it. Smart stands for Specific, Measurable, Attainable, Relevant, Time-bound.

So you should be able to answer the following questions for each KPI:
Is the objective specific?
Can you measure progress towards that goal?
Is the goal realistic? Can it really be attained?
How relevant is the KPI to your business goal?
Is there a time frame for achieving this goal?

Choosing too many KPIs will fracture a team’s focus and cohesion. Limiting the number of KPIs on the board at any given time keeps everyone on track and increases the likelihood of success. The Rockefeller Framework for management suggests having one main priority for each quarter, along with 3-5 “rocks” or KPIs that support the main goal. Any more than that, and your focus is too divided to make any real progress, says Rockefeller.

It’s really important to make your KPIs realistic to keep a team engaged. Unrealistic goals are one of the biggest demotivators for employees. For instance, imagine setting a goal of 100% customer satisfaction. Not only is that essentially unachievable, but as soon as one customer responds negatively, the goal is no longer possible. It’s better to start with challenging, but small goals that ladder into a larger goal over time.

#4 List metrics to measure

You know by now that KPIs should be tangible metrics that can be analyzed to show positive and negative changes toward a goal. That doesn’t mean that a KPI always has to be inherently quantitative, for example, “reduce response time.”

Qualitative concepts can be made quantitative. For example, a more abstract concept like employee satisfaction can be made quantitative by surveying employees periodically or by measuring employee attrition. But, KPIs can’t be conceptual. They need to be clear and measurable.

Using a suite of metrics helps teams gain a holistic perspective, but avoid over-indexing on any one metric.

#5 Map metrics to roles

The next step is to identify who is responsible for achieving the goal.

Here’s where the audience comes into consideration. Some KPIs will mostly be meaningful to one role or department, while others will be more relevant to the rest of the business, notably, those ones that tie in most directly with overall company KPIs.

For instance, reducing first response time could be mapped to a customer service admin since it involves improving queue management while keeping resolution SLA in check is every agent’s responsibility.

#6 Communicate KPIs and measure progress

To keep KPIs top of mind for teams, they should be communicated and updated regularly. Visibility will increase employee engagement and inspire accountability. In fact, over 50% of employees say that more company information and data sharing had a significant positive impact on their productivity and performance.8

Plus, to really make KPIs count, the data must be used to assess performance and drive action. As such, they should be reviewed on a regular cadence.

Timing matters. If evaluated too infrequently, any variance in the KPI may be hard to explain because it may be difficult to remember the context. Furthermore, the window for taking corrective action may be long past. On the other hand, reporting too frequently can lead to missing larger, longer-term trends and can be a waste of time.

It’s difficult to set hard-and-fast rules since KPIs will be different for every business, but some things to consider in determining how often to review any given KPI are as follows:
– Sensitivity: If it would take quite some time to see an impact on a KPI, for example, determining the impact of a policy change on annual renewal rates, then it’s better to measure less often.
– Urgency: If there’s a strong need to make a fast improvement, then it’s best to measure more regularly.
– Cost: Some KPIs take more work to measure than others. Some may be included out-of-the-box as part of your software. Freshdesk makes it easy to measure many common customer support KPIs, so they can be reported frequently. Other metrics are highly customized or require crossing data from different sources, so those will take more time and be more expensive. In those cases, it may be more prudent to check in on those less often.

Visualization can help make complex data more accessible for everyone, and good customer support tools will include these in their reporting features. An easy way to share KPIs in a digestible format is through dashboards.

What is a customer service KPI dashboard?

A customer service KPI dashboard is a live display of all the metrics that a team is measuring. A dashboard mainly helps with monitoring team performance and customer satisfaction metrics, including the total number of tickets resolved, average response time, and CSAT score.

Customer service KPI dashboard

Like we’ve said before, KPIs can be assessed alongside one another to identify important dependencies. For example, a decrease in response time might result in an increase in customer satisfaction, in which case a team could narrow in on making gains in both satisfaction and responsiveness goals by focusing heavily on response time.

All in all, simply looking at the numbers isn’t enough. Data, when presented on a dashboard, is most valuable since it can be used to identify trends that tell a story and give insight into how to proceed. Any variance in KPIs overtime should be connected to a cause, some activity, or event that caused the number to shift.

In that way, teams can continue things that move the KPI closer to the desired state and avoid the ones that move them further away from the desired state. After all, the real power of KPIs, the ones that matter, is their ability to provide insight that informs a team’s strategy and moves them toward success. Let’s find out more about how you can empower your team.

Bird's eye view

How can you help your customer service team achieve KPIs?

In addition to setting the right KPIs, it’s important to objectively assess team performance, understand how different activities impact their goals, and identify ways to improve. While certain issues that your team is facing could be unique, here are four ways in which you can help your team achieve their KPIS.

#1 Focus on agent enablement

Your support team is only as good as the resources they have to offer quick assistance. Here are a few things that you can set up to enable agents:
– Internal knowledge base: A one-stop repository for all articles, policies, and resources for support agents that helps agents with finding answers to customer questions with ease.
– Agent assist bot: AI-enabled bots and recommendations that recommend the next best answer, resource, or course of action and are especially handy while maintaining the quality of support as you scale your team.
– Canned responses: Answers that are pre-saved or templated to enable agents to answer repetitive questions with the click of a button.

Investing in these agent productivity boosters will help ensure that KPIs like resolution SLA, and first response resolution see a positive uptick.

#2 Automate routine tasks

Right from the time a ticket is created until the time it’s resolved, there are a ton of (repetitive) activities that an agent has to perform including picking up tickets, following up while collaborating, and sending CSAT surveys. There is no escaping from these activities. Or is there?

Automating these workflows can free agents from these repetitive tasks and also positively impact KPIs such as average handle time, and the number of tickets resolved. A good help desk software will allow you to set up flexible automation rules with various triggers including keywords, time, and events or activities performed on a ticket.

Automations - 24/7 support

#3 Use an omnichannel customer service software

If you’re offering support across channels and using different tools for managing conversations on different channels, then your agents are spending too much time juggling between tools than you think they are. 

Investing in an omnichannel customer service software that streamlines conversations from different channels into a single view helps ensure that agents can offer seamless support across channels with ease. Agents will also be empowered to deliver context-rich solutions that can improve customer satisfaction and business performance KPIs.

Screenshot of Freshdesk - an omnichannel customer service software

#4 Enable customer self-service

Investing in customer self-service helps you hit two birds with one stone – improving customer experience as well as easing agent bandwidth. Here are a few options you can implement:
– Knowledge base/self-service portal: The go-to place for customers to get basic doubts cleared by browsing through articles and FAQs without interacting with human agents.
– Chatbots: Powerful virtual agents that can help customers with issues of varying difficulty instantly.
– Community forums: The place where customers interact with one another and help each other solve issues.

Screenshot of a help widget by Freshdesk

To sum up

If you’re just setting up your business, ensure you prioritize customer service KPIs that resonate the most with your industry. If your team is already up and running, revisit your KPIs today and check if they align with your long-term support targets. By setting realistic and focussed KPIs, you can extract the best from your support team and provide stellar customer service.

Sources:
1, 4 – https://freshdesk.com/resources/what-customers-really-want-report
2 – https://www.sqmgroup.com/resources/library/blog/fcr-metric-operating-philosophy
3 – https://www.icmi.com/resources/2017/how-languages-impact-customer-experience
5 – https://www.getfeedback.com/resources/csat/how-to-use-the-customer-satisfaction-score-csat-metric/
6 – https://hbr.org/2014/10/the-value-of-keeping-the-right-customers
7 – https://altfeldinc.com/pdfs/Customer%20Loyalty.pdf
8 – https://www.geckoboard.com/best-practice/methodology/


Updated on 22/10/2021