Measuring Customer Service
You may spend a lot of time and money on training your people to deliver the very best customer service. However, unless you track and measure how your team are performing on customer service, you will never be able to find out if your spend has been a worthwhile investment. This blog offers you four options to measure your customer service levels. These measures can be applied at both team and organisational levels.
Understanding lead and lag measures
Before deciding your customer service metrics, it is important to understand the difference between lead and lag measures. A lead measure is measuring an activity which influences a lag measure.
- Lead measures are taken early in a customer service process e.g., the time taken to provide a quote for a customer.
- Lag measures are taken at the end of a customer service process e.g., customer satisfaction.
By using these examples, making sure the quotes are issued promptly (lead metric) is likely to increase customer satisfaction (lag metric). It shows how measuring and taking action on lead measures influences the outcome of the lag measures.
This blog focuses on four lag measures i.e.,
- Customer effort
- Customer satisfaction
- Net promoter score (NPS)
- Lifetime value of a customer
These metrics can be used in isolation. However, we recommend that they are used together to provide a more rounded, multi-dimensional view of how well customer service is being delivered by your organisation.
Why measuring customer service is so important
Customers are choice rich and time poor. With the internet and online shopping, customers have more choice than ever before. Customers can be extremely well-informed too with latest research available within seconds. Price comparison websites have democratised buying and selling online. Customer reviews and social media have made businesses more accountable then ever.
Companies and organisations that get customer service right are celebrated. Those who don’t are berated. Customer service is now about delivering wow! moments and avoiding those painful ouch! moments. And when ouch! moments do occur, then they need to be resolved swiftly and with minimum fuss.
Let’s take a look at each customer service metric in turn.
As previously mentioned, customers are choice rich yet time poor. With so much choice available they can go to many different places to receive the same or similar products and services your company offers. Yet being time poor means that speed as well as quality is important.
Customer effort asks you to measure how easy is it for your customers to do business with you. Processes need to be slick and frictionless. This short video shows in a light-hearted way how this can go wrong.
Recommended action. Create a customer effort metric that can inform you how easy it is for your customers to do business with you. This can be done by survey questionnaires online or through face-to-face focus groups or telephone interviews.
Whichever method you decide to use, develop a scale (e.g., 1 to 10) to gain quantitative data and open questions to collect narrative, qualitative data.
It is recommended that you collect this data as soon after the customer transaction has taken place as is possible. This is likely to provide the most insightful data.
This is arguably the most common customer service metric and the one that you will likely be most familiar with. However, just because it is popular doesn’t mean to say it is the most helpful, especially when used in isolation.
Customer satisfaction metrics tend to be used by gathering data in a survey. Usually, customer satisfaction surveys are executed online and focus on the transactional elements such as the customer experience and complaint handling. They tend to rely on gathering numerical (i.e., quantitative) data using a Likert scale e.g., 1 to 10, soon after a transaction has taken place.
Recommended action. Expand your surveys to include other areas that drive customer satisfaction. For example, we are huge advocates of the approach taken by the Institute of Customer Service where their measure of customer satisfaction includes:
- Customer experience
- Handling complaints
- Customer ethos
- Emotional connection
Read our blog article ‘What drives customer satisfaction’ for more information.
As with each of these customer service metrics, it is important to consider the timing and method of collecting this data. You may decide to go for the online survey to increase your sample size. However, by choosing this method you risk not getting the in-depth responses you are looking for and also alienating your audience by yet another survey (something we call survey-i-tus).
An alternative method would be telephone interviews using a blend of ratings and open questions. The trade-off will be higher quality data against a much smaller sample size. Another benefit of this method is the impact on a customer who may well feel highly valued by being consulted in this way. At Beyond Theory we can speak of our own very positive experiences of using this methodology.
Net Promoter Score
This customer service measure, often referred to as NPS, is frequently used in sales situations. The Net Promoter Score metric focuses on how much a customer will recommend your products and services. For example, rating scales and used as follows:
- 10 – highly recommended.
- 1 – will not recommend.
The scale itself it then broken down into 3 categories:
- 10 to 9 – recommended which is viewed as positive
- 8 to 5 – neutral.
- 4 to 1 – not recommended.
NPS scores have their place. However, as with all customer service metrics covered by this blog, careful thought needs to given to their timing and execution. For example, some organisations issue their NPS questions directly after a sale or a customer interaction has taken place. By definition this gets an immediate, emotional response. However, greater value may be derived from a NPS survey at a later date e.g. 6 months after the sale or interaction. This will enable feedback to be given when the product or service has been in use for some time.
Recommended action. Expand your use of NPS from not only at time of purchase to much later in the product or service life cycle. This will provide much richer information and, potentially, may offer an opportunity to re-engage with the customer to cross-sell other products and services.
Lifetime Value of a Customer
In our experience this is the least used customer service metric. The Lifetime Value of a Customer metric measures exactly that – i.e., how much a customer is worth to you over a period of time. Its purpose is to highlight and measure the importance of customer loyalty.
This metric is covered in more detail in our Lifetime Value of a Customer blog article. In summary it identifies how much a customer’s business is worth to your own business during a particular time. Then simple arithmetic extrapolates the value of a customer over a period of time. For example, the above blog article talks about a coffee shop, repeated purchases and the margins to be gained over a defined period.
Once this value has been highlighted you can then take steps to increase customer loyalty (e.g. by offering discounts for future and/or additional products and services). This a fabulous metric to use to influence your team’s attitude and behaviours towards your existing customer base. As previously mentioned, customers are choice rich and time poor – so once they fall in love with your products and services why would they want to leave your brand for another?
Recommended action. Adopt the Lifetime Value of a Customer metric and educate your team to its importance. Along with the other measures described in this blog, this metric will provide useful insight. However, unlike the other methods this metric can be measured without any customer interaction. Only your internal data is required.
Each of the four customer service measures covered in this blog article have their own merits. However, if used in isolation they will only provide part of the story of how your customers feel and view how they are being treated. It is recommended that these metrics are used in conjunction with each other, in a strategic way to influence your business.
Of course, each of the above metrics are what we described as lag measures. In our next blog article, we will discuss the merits of using lead measures i.e., those which influence the lag measures.
Director & Senior Consultant, Beyond Theory