3 Essential Customer Service Metrics Every Team Should Measure

When making hiring decisions, many startups with limited resources choose sales talent over customer service, aiming to scale and grow their consumer base as quickly as possible. But considering that it costs companies five times more to attract a new customer than to retain an existing client, this tactic doesn’t really add up.

You only need to look at companies like Amazon and Apple to see that top notch customer service is a key driver of success. But you don’t need to be a multi-billion dollar multi-national or have a huge customer service team to provide the best support possible.

If your startup is growing, first you need to assess how much you need to invest in customer service per client. Then you need to look into the strengths and weaknesses of your customer support system.

So here are three simple customer service metrics which your team can put in place today.

1. Customer Lifetime Value

As I already touched upon, customer acquisition and retention are metrics which go hand-in-hand. The customer service metric you should really be interested in, however, is Customer Lifetime Value (CLV), as it allows you to understand the net profit that will be generated by each new client throughout their time spent working with your company.

This is important because it allows you to effectively budget for your customer service team and understand exactly how much, on average, you should really be investing in customer retention per client.

Unfortunately, only 42% of businesses are able to measure this metric accurately, according to econsultancy. So how should you go about it?

To calculate the historical CLV per customer, which is a good indication of future value, look at the gross profit from all previous purchases for an individual customer, taking into account discounts and refunds, and average this out over the number of years they have worked with you. Then multiply this by your average customer lifespan. This will give you a relatively accurate CLV for each client.

Note that if you’ve only been in operation a year or two, it might make more sense for you to replace average client lifetimes for your company with the industry average client retention rate.

While you could do a blanket analysis of all of your customers – finding a basic CLV – it would be far more accurate to segment your clients by demographic, location, interests, etc. That way you can predict CLV fairly well for each client-type and understand how each client-type will impact your future profit margins.

2. The Three R’s

There is nothing like waiting in a long line, or sitting on hold on a phone-call for hours to turn a reasonably small problem into an extremely frustrating issue. More than half of customers state that they become irritated if they can’t speak to a real person right away, so when receiving customer calls it is important to keep wait time to a minimum.

While a speedy response is important, it’s not the only thing you should be measuring: What really counts is an efficient resolution.

To make sure your team is giving the best service possible, in the most efficient way, you should be keeping track of the following customer service metrics:

• Response time – meaning the initial response time to respond to a complaint.
• Response efficiency – meaning the number of people a client must speak to before an issue is resolved.
• Resolution time – meaning the overall time it takes for an issue to get resolved from initial contact to final resolution.

Obviously, in all cases the number should be low. Once your team has set a benchmark for all three “R’s”, your customer service team must constantly strive to lower the numbers. The faster the response, the fewer people a client must speak to, and the faster a problem is resolved, the better it will be for client satisfaction – and your bottom line.

3. Net Promoter Scores

Alan Weiss, author of Million Dollar Consulting argues the key to success lies in asking your customers to be part of the solution, and not viewing them as part of the problem.

Every interaction that your company has with a client – be it a sales call, a product tutorial, or responding to a complaint – is a chance to get invaluable feedback which can improve your service overall.

Serial entrepreneur Daymond John argues, “Loyal, engaged customers, customers with whom you actively work to make and continue a connection, are a great focus group that will not lie to you.”

Great customer support is proven to have a positive impact on Net Promoter Scores (NPS) – an index that measures the willingness of customers to recommend a company or brand to others.

NPS is generally used to judge how happy a client is with a product or service, and how loyal they are to a brand. By asking a generic question like “How likely would you be to recommend us to a friend?”, NPS allows companies to sort clients into three groups: 1) Promotors 2) Passives 3) Detractors.

By taking the percentage of customers who are promoters and subtracting the percentage who are detractors, companies can calculate their Net Promoter Score.

While the nature of the NPS system is black and white simplicity– is the client very happy, content or displeased with your service — and the insights which it offers are not detailed, adding this one question to client feedback requests allows you to get a bird’s eye view of how much your clients really love your product, and reach out to those who are not loving it as much as they could be.

For startups with limited resources, keeping track of customer service metrics is key. It allows companies to strengthen problem areas, offer extra support and training for team members who are falling behind, and highlight weak links.

Assessing the strength of customer service is not as clear as other departments such as sales, but if you follow these three clear metrics, it should help you ensure that clients are being provided the best service possible.