The 10 crucial customer service KPIs and how to track them?

Getting a perspective on your numbers, statistics, and metrics is always helpful.

If you’re associated with a Customer Support team, setting the right (most crucial) KPIs and customer support metrics can immensely help you assess the performance of your team. And, of course, take corrective course of action.

It is also one of the best ways to recognise deserving employees and inspire them to give their best performance.

To save you some time, we recognised the 10 most crucial customer service KPIs you should (definitely) track.

These shall be the most insightful indicators of your organisation’s customer support performance.

But first, let’s learn more about these KPIs.

Next: Scroll down or skip to the KPIs. ⏭

P.S. We listened to some lofi music while writing this, in case you want to try.

What are customer service KPIs?

Customer service KPIs (Key Performance Indicators) are metrics used to measure the performance of your customer service teams.

These KPIs analyse the quality of customer experience provided by your company. It also helps you understand where you lack and how you can improve your customer service strategy.

In short, these KPIs help you understand whether a business is going in the wrong direction or the right direction.

Why do customer service KPIs matter?

• Customer support agents can make or break your business depending on how they are treating your customers.
• Customer service KPIs help you measure how effectively your customer service agents can engage with your customers.
• These metrics can provide data-driven knowledge for better customer engagement and communication.
• These KPIs will analyze customer feedback for you and use them to track your revenues.

The performance of your customer support agents can be seen clearly and objectively when the correct KPIs are being tracked. This, in turn, has an increasing impact on your org's bottom line.

To help you understand this better, we have come up with a list. In this article, we will discuss the 10 most crucial customer service KPIs.

Read on if this is something you have been looking for.

1. Customer Satisfaction Score

One of the most common KPIs to measure customer service performance is the Customer Satisfaction Score, widely known as CSAT. You can use this metric to measure your customers’ sentiments regarding your products and services.

A simple question that you might ask can be, “On a scale of 1 to 5, how would you rate your recent experience with our product/service?”

You can use Chatwoot to create your own CSAT survey.

With a CSAT survey, you’ll be able to ask your customers for rating and feedback when an agent closes the conversation.

It is calculated by asking a simple question such as, "Rate your conversation."  A similar survey emoji scale is displayed on the screen at the same time. The client also has the option to provide extra feedback after completing the rating.

Now how to derive the final CSAT score?

The number of customers who have given a score of 4 and 5 is divided by the total number of customer responses. The score can then be multiplied by 100 to express in percentage.

For example, if the number of customers who gave 4 and 5 is 40 and the total number of responses is 50, then the CSAT score would be 80%.

Running regular CSAT surveys is the best way to judge your company's operations and customer happiness from time to time.

But how frequently should you conduct these surveys? You should send CSAT surveys to customers immediately after any purchase, new product launch, significant product updates likes bug fixes, new features, etc.

You can then assess your CSAT scores on a monthly, quarterly, as well as yearly basis. You can read here to know how companies like Google improved their CSAT scores, and for other inspiring stories on providing great customer satisfaction and experience.

2. Net Promoter Score

Net Promoter Score (NPS) determines the extent to which your customers will be loyal to you. It also gives insights into how likely customers are to recommend your brand to others.

Your customers are your biggest source of advertisement. In this sense, NPS is an important KPI. The higher the NPS for your brand, the better the chances of your customers being loyal to you.

A higher NPS score also means your customers are highly likely to recommend your brand to their friends, family, and colleagues.

Your company’s growth can improve by 20% to 60% when you focus on improving NPS.

Here’s how you calculate NPS.

Using a 0–10 scale, determine your NPS with the help of the answers to this question:

How likely are you to refer [your brand] to your friends, colleagues, or family?

The respondents can be divided into three categories:

• Promoters (scoring 9–10) are devoted supporters who will continue to purchase and recommend products. They are your most loyal customers.
• Passives (scoring 7-8) are happy but not as active as promoters. They are open to competing products.
• Detractors (scoring 0-6) are dissatisfied customers who can harm your brand and obstruct expansion through negative reviews and feedback.

To derive the final NPS, you have to subtract the percentage of detractors from the percentage of promoters.

NPS can drop down to a minimum level of (-) 100 if all are detractors. It can reach a maximum level of 100 if all are promoters.

Refer the formula here:

3. First Contact Resolution

No customer would like to keep contacting you repeatedly to resolve the same issue. If a customer has to contact your support repeatedly for the same issue, it affects the customer retention. This is why First Contact Resolution is an important customer service KPI you should take care of.

Related read: 30 customer service tips you can adopt right now

Here's how you calculate FCR.

Divide the number of customer issues resolved on the first call by the total number of cases handled in a day.

The first call resolution rate on average is 74% across the industry.

But this changes according to the type of the request, the platforms used to raise and resolve these requests, the type of business, etc.

FCR rates around 90% are generally viewed as high, while 40% is regarded as the bottom end.

Why is FCR important?

FCR assesses how well a business can respond to customer calls, emails, and other support requests via various channels during the initial engagement. Focusing on the FCR rate helps you improve your customer service delivery speed and quality. This in turn increases customer satisfaction and also improves customer experience.

4. Customer Retention Rate

Customer retention is cheaper than customer acquisition.

This makes customer retention rate an important customer service KPI.

Customer retention rate is the percentage of customers you retain over a period of time versus the percentage of customers you lose.

Your existing customers generate 65% of your company’s business. Moreover, acquiring a new customer is seven times more expensive than retaining an existing one.

Your customer retention rate can provide you with insights into the factors that keep customers coming back to your business. It can also highlight areas where customer service could be improved.

To calculate customer retention rate, we need to look at three factors:

• Customers that you have at the start of the business (S)
• Customers that you have at the end of the business (E)
• The total number of customers acquired during the period for which you are calculating (N)

The formula for customer retention will then be as follows.

You can use an easy-to-use calculator to estimate customer retention rate by CleverTap here.

5. Average Resolution Time

Average resolution is a metric that measures the average time taken by customer service agents to resolve issues or convert inbound sales.

During operating hours, customer support reps typically manage multiple customer conversations at once. This makes it important for you to keep a track of the Average Resolution Time.

Customers that contact a business via live chat are still hoping for a faster experience. 59% of customers choose live chat before voice channels.

Average Resolution Time can be calculated by dividing the total time taken to resolve all issues by the total number of conversations in a given period.

6. Average Conversion Rate

Average Conversion Rate is the average number of conversions per interaction, in percentage.

Here’s how you calculate the average conversion rate.

Divide the number of conversions by the total number of interactions related to that conversion during the same time period.

For example, if you made 100 conversions from 1,000 interactions, the conversion rate would be 10%, since (100 ÷ 1,000) x 100 = 10%.

To measure your conversion rates, enable conversion tracking across all platforms that you use for your business.

7. Customer Effort Score

Compared to just 9% of customers who have a low-effort interaction, 96% of customers who have a high-effort engagement become more dissatisfied. A low-effort interaction means that the customer has to spend the least amount of effort in the interaction with the customer service rep.

One of the most common things that reduces the effort from your customer is that your customer service agents have all the required information handy such as the purchase history of the customer, basic details of the complaint raised etc.

A high-effort engagement/interaction means that the customer has to provide all the information to the customer support executive and do most of the talking. This means that the customer has to do most of the work to solve his own issue. This can make the customer dissatisfied and create an unpleasant experience.

Customer Effort Score measures customer experience. It determines how easy and effortless it is for customers to interact with your business.

Customer service agents can improve the customer experience by monitoring CES and the factors that influence it.

When customer service reps prevent callbacks, they reduce the customer effort. When customers have to put in less effort to get their issues solved, the customer effort score improves.

Delivering an experience that requires low customer efforts will make them happier and prevent them from churning.

Now how does reducing customer effort benefit you?

• When companies deliver high performance and require customers to put in low effort, your customer satisfaction improves. This increases your loyal base of customers.
• When customers have to put less effort, they become more satisfied and are more likely to repurchase.
• By reducing customer efforts, you also reduce customer service costs.
• Low-effort interactions cut expenses by reducing repeat calls by up to 40%, escalations by 50%, and channel switching by 54%.

This is how you calculate your Customer Effort Score.

First, the customers rate the efforts that they had to put into resolving the issue on a scale of 1 to 7.

Negative customer feedback is shown by the 1-3 scale segment (Strongly Disagree to Somewhat Disagree). Positive customer feedback is shown by the 5-7 scale segment (Somewhat Agree to Strongly Agree).

The sum of all these scores is taken and then divided by the total number of respondents to arrive at the final CES.

This is what the formula looks like:

8. Customer Churn Rate

The rate at which consumers stop doing business with a company is known as the customer churn rate. It is also known as the rate of attrition.

Most frequently, it is expressed as the percentage of service subscribers who cancel their memberships within a certain time frame.

A lower churn rate indicates better customer service delivery and effective marketing efforts.

The number of subscribers that discontinue their subscriptions or do not renew them may also be considered churned. The more the number of clients who quit making purchases from your company, the greater your churn rate.

Here is how to measure customer churn rate –

Subtract the number of users at the end of the period from the number of users at the beginning of the period and divide it by the users at the beginning of the period.

You can also use this calculator by Omnicalculator to measure customer churn rate.

Your retention strategy can be easily modified if you regularly monitor the churn rate. A company's ability to grow is affected by high churn. Being proactive in ensuring customer happiness can accelerate business growth.

9. Customer Lifetime Value

Customer Lifetime Value can be defined as the expected total revenues that a customer generates for you during his association with your business.

There are three factors that we need to focus on when calculating CLV.

1. Average Transaction Size or Order Value

Your first step in calculating CLV would be to find what is your average value of a sale.

2. Number of Transactions

Next, you need to know the number of transactions a customer is making with you. The transaction frequency is a key component of this customer service KPI.

3. Retention Period

You need to find out how long a customer remains loyal to your business on average.

Use the following formula to calculate CLV.

An example of CLV is as follows.

Let us assume that a regional chain of four bakeries makes $10 in sales on average. A typical client is a local person who comes in thrice a week, 45 weeks a year, over the course of 10 years on average.

The CLV in this case can be calculated as shown below.

CLV = $10 (average sale) x 135 (total visits annually) x 10 years = $13,500

10. Employee Turnover Rate and Employee Satisfaction Score

Your employees are the anchor of your business.

So far we have looked at some of the most crucial customer service KPIs. But we also need to remember that the performance of your KPIs are directly linked to the performance of your employees.

If your employees are satisfied with their job, they can deliver to the best of their capacities. This in turn will ensure that you have more loyal and satisfied customers.

Two important metrics, employee turnover rate, and employee net promoter score can be used to measure employee satisfaction.

This is how you measure employee turnover rate.

Divide the number of employees who left the company within a certain period of time by the average number of employees in the company during the same period.

Your employees might sometimes quit because of lower salaries than industry standards, unethical work culture, insufficient employee benefits, lack of incentives, etc. When more employees quit frequently, it might indicate that there are issues with your company.

You can make changes to your business by having a better understanding of your turnover rate. These improvements will directly benefit your company.

For instance, lower employee turnover will mean higher employee productivity, better teamwork, and increased employee retention rates.

The employee net promoter score is another important KPI that you should track if you want to reduce your employee turnover rate.

How to calculate this?

The first step is to answer the question, “How likely are you to recommend this company to other job seekers?”

Employees give their responses on a scale of 0 to 10 with 0 being the worst and 10 being the best. Employees who give scores between 0 to 6 are detractors, 7 to 8 are passive, and 9 to 10 are promoters.

Similar to NPS, this score is also calculated by subtracting the percentage of detractors from the percentage of promoters.

A parting note

There are many more customer service KPIs that you will find but these 10 KPIs can be a great place to start. Let us know which ones you already track and which ones would you like to adopt.