Top customer service metrics you should be measuring

Customer service metrics are the units businesses use to track customer experience happiness levels and in turn, optimize an organizations customer support team and services.

Key performance indicators (KPIs) are metrics that can help evaluate support agent performance, the quality of customer interactions, and other important support processes, such as the user experience. These processes are key to a customer’s journey and the best path to addressing customer issues.

There are two types of customer service KPIs: operational metrics and organizational metrics. Both play an important role in understanding the full picture of a customer journey by measuring customer service performance in a holistic way.

Operational metrics: These are metrics that measure how efficient and effective a customer service team is handling its support processes and workflows. The metrics are based on quantitative analysis such as numbers and data. Things that might be measured include emails received, calls received, response rate, among others.

Organizational metrics: Unlike operational metrics, these metrics, also referred to as experience data, highlight the context for how customers actually experience the goods or services provided to them by the business. In other words, this is human feedback about how a customer feels about a business and where the gaps are between the company and what a customer is actually experiencing.

As businesses become increasingly focused on the customer experience and learning the intricacies of customer actions, feelings and needs, customer service metrics play a pivotal role in shaping company success and longevity.

According to research from McKinsey there is a distinct linkage to value for those who were both “satisfied and delighted.”¹ Their research found customers who both found excitement and delight in the goods or services provided they tended to cross-sell, up-sell and were less likely to down-sell. An example shared was in insurance. If companies were able to bring joy to a portion of already satisfied customers, this had the potential to lead to an extra 8% to 12% in added revenue.

Another fundamental reason why customer service metrics are crucial is their direct correlation to customer satisfaction. By measuring metrics such as average response time, resolution time and customer feedback scores, businesses gain insights into how effectively they are meeting customer needs and expectations. High satisfaction levels not only foster customer loyalty but also enhance brand reputation, leading to repeat business and positive word-of-mouth recommendations.

In addition, customer service metrics provide actionable data for improving operational efficiency and answering customer problems. Metrics like first contact resolution rate and customer retention rate highlight areas where businesses can streamline processes and reduce friction in customer interactions.

An example being a low first contact resolution rate, which can indicate a need for better-trained staff or improved access to information systems. By identifying these bottlenecks of support tickets and addressing them promptly, businesses can optimize resources and deliver faster, more effective service. This efficiency not only benefits customers by reducing wait times and frustrations but also improves employee morale and productivity.

Metrics such as customer complaint trends, net promoter score (NPS), and customer effort score (CES) provide valuable insights into evolving customer preferences and pain points. These issues might include ticket volume, ticket backlog and unfinished support requests. The metrics provide qualifiable data on customer satisfaction, operational efficiency and emerging trends, enabling businesses to make informed decisions and drive continuous improvement.

Investing in customer service metrics isn’t just about measuring performance, it’s about cultivating a culture of excellence and responsiveness that resonates with customers and drives sustainable growth over time.

A customer satisfaction score gauges how satisfied customers are with a company's goods or services, providing a snapshot of customer sentiment at important touchpoints. A customer satisfaction survey helps businesses identify strengths and weaknesses in their customer service, enabling targeted improvements. By tracking CSAT over time, companies are able to access the impact of changes and initiatives on customer experience.

How to measure: Businesses typically measure a CSAT score by using CSAT surveys that ask customers to rate their satisfaction on a scale, such as 1 to 5 or 1 to 10, after an interaction or purchase. The metric can go from very satisfied to very dissatisfied. The score is then calculated by dividing the number of satisfied customers (those who rate above a certain threshold) by the total number of respondents and multiplying by 100 to get a percentage.

A customer effort score measures how easy or difficult it is for customers to interact with a business, particularly when resolving issues or completing transactions. This metric helps organizations understand the friction points in the customer journey and highlights areas where they can streamline processes to enhance the overall experience. A lower effort score indicates that customers find it easier to get their needs met, which can lead to higher satisfaction and loyalty.

How to measure: A business will typically ask customers a straightforward question in real-time, such as ‘How easy was it to resolve your issues?’ using a scale of 1 to 7, or some such, with 1 being very difficult and 7 being very easy. The score is then calculated by averaging the responses, allowing companies to track changes over time and identify areas for improvement.

A net promoter score assesses customer loyalty by measuring the likelihood that customers would recommend a company’s products or services to others. It categorizes respondents into three groups: promoters, passives and detractors, providing insights into overall customer sentiment and potential for growth. By analyzing NPS, businesses can identify strengths to use and weaknesses to address, ultimately driving customer retention and advocacy.

How to measure: A business will likely send a survey asking customers to rate on a scale from 0 to 10, how likely they are to recommend the company to a friend or colleague. The score is calculated by subtracting the percentage of detractors (a score of 0–6) from the percentage of promoters (a score of 9–10), resulting in a score that can range from -100 to +100.

Social media metrics provide insights into customer interactions and sentiments expressed on various social platforms, helping businesses understand how effectively they are addressing customer inquiries and concerns. Metrics such as response time, engagement rate and sentiment analysis reveal both the quality of customer service and the overall perception of the brand. By monitoring these metrics, companies can adapt their strategies to enhance customer satisfaction and foster stronger online relationships.

How to measure: Businesses can track response times to customer inquiries, the volume of messages received, and the sentiment of comments by using social media management tools. In addition, businesses can use surveys and direct feedback to help quantify customer satisfaction related to social media interactions, providing a clearer picture of performance in this area.

Customer churn rate is a metric that measure the rate at which customers stop their relationship with a business, which is a critical indicator of customer satisfaction and service effectiveness. By analyzing churn rates or customer attrition, companies can identify patterns that signal dissatisfaction, helping them to address underlying issues and improve retention strategies. Understanding churn in the context of customer service metrics allows businesses to implement proactive measures to enhance customer experience and customer loyalty.

How to measure: Churn rate is calculated by dividing the number of customers lost during a specific period by the total number of customers at the beginning of that period. This can be expressed as a percentage, allowing companies to track changes over time and evaluate the effectiveness of their customer service initiatives.

First response time, or FRT, measures the amount of time it takes for an agent to provide an initial reply to a customer’s inquiry or complaint. This metric is crucial because quicker responses to customer queries often lead to a better customer service experience and the perception of better service quality. By monitoring FRT, businesses can identify areas for improvement in their response processes and help ensure that customers feel valued and heard promptly.

How to measure: Businesses track the timestamp of when a customer inquiry is received and the timestamp of when the first response is sent. The average time taken across multiple inquiries is then calculated, providing a clear metric that can be analyzed over time to assess performance and identify trends.

Average resolution rate measures the percentage of customer inquiries or issues that are successfully resolved within a given time frame, serving as a key indicator to the effectiveness of customer service efforts. A high average resolution rate suggests that a company is effectively addressing customer needs and concerns, which can lead to increased satisfaction and loyalty. By analyzing average resolution time, businesses can identify trends in service performance and pinpoint areas where more training or resources might be needed.

How to measure: Businesses calculate the number of resolved issues divided by the total number of inquiries received during a specific period, then multiply by 100 to express it as a percentage. This metric can be tracked over time to monitor improvements or declines in resolution effectiveness, providing valuable insights into the overall performance of the customer service team. A higher that average resolution time might signal a need for a stronger knowledge base.

Average handle time differs from average resolution time because it is specific to the time a customer spends on the phone during a service interaction. It is another way to measure a customer service team’s efficiency. This metric is important to a customers’ support experience and is an important customer service metric. It’s also important to note that this metric doesn’t factor in the time a customer spends on hold or in a queue.

How to measure: A business measures average handle time by adding the average talk time, average hold time and total time taken for after-call tasks, dividing that total by the number of calls received. The metric is a tricky one because agents must strike the right balance between speed and quality. The metric can also be done for email by adding up all the minutes (time it takes from opening the email through to resolution), dividing that by the total number of tickets received.

The preferred communication channel is an operational customer service metric that shows the business which methods customers prefer to interact with the business, such as through phone, email, live chat or social media. Understanding these preferences is essential for tailoring customer service strategies to meet customer needs and enhance their overall experience. By analyzing preferred communication channels, businesses can allocate resources more effectively and improve engagement by reaching customers through their chosen platforms.

How to measure: A business might choose to survey customers to ask about preferred methods for inquiries and support. Also, tracking the volume of interactions across different channels can provide quantitative data on usage patterns, helping companies identify trends and adjust their customer service approaches accordingly.

Customer retention rate is a sign of a happy customer and typically means that a business has created a positive experience for their customers. The metric itself is a percentage of customers who continue to do business with a company over a specific period of time. A high retention rate indicates that customers are satisfied with the service and likely to remain loyal, which can lead to increased lifetime value and reduced churn. By understanding this metric businesses can identify factors that contribute to customer loyalty and what needs to be done to bring in new customers.

How to measure: A business calculates this by taking the number of customers at the end of a period, subtracting the number of new customers acquired during that period. And then dividing the result by the number of customers at the beginning of the period. This figure is then multiplied by 100 to express it as a percentage, allowing companies to track changes in customer loyalty over time.

The first contact resolution rate measures the rate at which tickets are resolved by a company’s first response to customer inquiries. This metric is crucial as it indicates how efficiently a team can communicate, follow-up with customers, and how well they understand customers' problems. The FCR is also an indicator for how much information a customer service agent is asking of a customer when they first reach out.

How to measure: A business calculates FCR by dividing FCR tickets by the total FCR eligible tickets and multiplying that by 100. The result is a FCR rate in the form of a percentage. A business should look for a high FCR rate, which would show that the customer service team is answering customer requests in a timely manner and communicating clearly with customers.

A service level agreement or SLA can help teams with ticket prioritization and meeting customer expectations. The SLA is an initial agreement set between the company and the customer laying out levels of service expected by the company and metrics by which service is measured. The SLA rate tells a company how well it is meeting customer expectations and whether the company can meet those expectations on time.

How to measure: A company's SLA adherence rate can be calculated by dividing the number of agreements met by the total number of agreements and multiplying that figure by 100%. Other ways to measure SLA is by defining specific metrics, collecting data by using service management tools and monitoring compliance against the benchmark figures.

Customer service metrics and emerging technologies like automation, artificial intelligence (AI), and cloud-based solutions are transforming how businesses engage with their customers. Traditional customer service metrics have been performed for many years and in many different industries. However, the integration of advanced technologies is not only enhancing these metrics but also creating new ones that better reflect the evolving landscape of customer interactions.

Automated systems can handle routine inquiries, reducing the workload on human agents and upping the average number of tickets a team can handle. Metrics like first response time can be significantly improved through automation, as chatbots and virtual assistants provide immediate responses to customer queries. While gen AI technology uses natural language processing (NLP) to craft personalized responses and suggestions, directly to customers in a self-service manner.

Businesses will oftentimes turn to software systems to help manage and maintain customer service metrics, including customer relationship management (CRM) systems. A CRM can be hosted online and help facilitate seamless integration of these technologies, further providing businesses with the flexibility and scalability to adapt to changing customer demands.

The convergence of customer service metrics and emerging technologies can foster a more responsive and efficient service model and ultimately enhance the customer service team’s performance. The evolution of these technologies can lead to more meaningful engagements, ultimately driving customer loyalty and business growth in an ever-increasing competitive landscape.