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Originally posted on July 6, 2023 @ 9:41 am

Customer service metrics enable companies to track their support efforts in an on-demand, multi-platform world. Plus, keeping tabs on your customer service metrics is an important way to measure the overall health of your brand. Happy customers make repeat purchases, reduce the load on your customer service team, and increase the reach of your brand through positive word of mouth. 

Keep reading to find out how to efficiently track customer success and satisfaction, and help your team stay on top of all things customer service. 

What are customer service metrics?

Customer service metrics are a set of key performance indicators used to measure the performance, quality, and efficiency of a business’s customer support efforts.

Tracking common metrics for customer service allows a business to allocate necessary resources, understand which channels customers use, and identify recurring issues or bottlenecks in the support process.

Customer service metrics are also used to measure client satisfaction. This includes direct feedback from customer surveys or polls, and also reports that calculate how long it takes for tickets to be resolved.

18 customer service metrics to track in 2023

Here’s a breakdown of the top customer service metrics that matter.

1. Net promoter score (NPS)

Your Net Promoter Score measures how likely your customers are to recommend your company to others. It’s one of the most important customer engagement success metrics. Only those customers who are on good terms with your brand are likely to recommend you to others.

To measure NPS, send a short survey to customers after a purchase or customer service interaction. Ask them one simple question: How likely are you to recommend the brand? NPS is usually measured on a scale of 1-10, but some use a five-point scale instead.

Source: Shaw Mobile text survey

To measure NPS, subtract your percentage of detractors (those who would not recommend your brand) from your promoters (those who would). Leave out those who fall in “maybe” territory—these people are considered “passives” and don’t impact your score. 

NPS = Percentage of promoters – Percentage of detractors 

2. Customer satisfaction score (CSAT)

Like NPS, CSAT involves asking your customers a simple survey question. However, in this case, you just ask them to rate their experience.

So, instead of asking whether they’d recommend you, you’re just asking how satisfied they are with you. This is one of the most valuable customer service success metrics. It encapsulates the entire customer service experience in one response.

You can send an NPS survey either after a purchase OR after a customer service interaction. For CSAT, it’s most common to send the survey after a customer service interaction only. You can use a numeric scale, or get creative, like Booking.com did in this CSAT survey:

Source: Booking.com email survey

To calculate CSAT, divide the number of positive scores on your survey by the total number of replies. Multiply by 100 to get the percentage. 

CSAT = (Number of positive scores/Number of replies) x 100 

By the way, Hootsuite Inbox can automatically send CSAT surveys after each customer service interaction and automatically pull the results into Hootsuite Analytics for easy analysis and reporting. 

3. Customer effort score (CES)

This is another metric determined by a simple survey. At first, the survey question looks very similar to that for CSAT. But in this case, rather than asking how satisfied the customer is with the service, you instead ask how easy it was to get the service they needed. 

Source: TurboTax email survey

This gives you a good sense of how well your customer service program is set up. Where CSAT measures the success of a specific interaction, CES measures the ease of accessing support in the first place. 

Hint: Offering customers support on all the channels where they expect it is a key way to improve CES. Hootsuite Inbox is a great tool to manage customer support across all social channels, keeping customers happy and boosting your CES.

The formula for calculating CES is the same as for CSAT—it’s just that the survey question addresses a different aspect of customer success. So to calculate CES, divide the number of positive scores on your CES survey by the total number of replies. Multiply by 100 to get the percentage. 

CES = (Number of positive scores/Number of replies) x 100 

4. Support ticket categories

For companies that organize their support tickets by type of issue, it’s important to keep tabs on which problems arise most often. If your CES is high, analyzing which categories receive the most volume can help you identify where customers exert the most effort.

Support ticket categories may include:

Sales question
Technical issues
Cancellations
Returns
Shipping
Product availability

Traffic, page views, Frequently Asked Questions pages, and help articles offer another way to measure where customers require the most assistance.

5. Ticket volume

In addition to tracking which issues come up most often, it’s just as important to keep an eye on the volume of tickets you receive over time.

Suppose the number of tickets you receive is on the rise—especially in a specific area. In that case, it may be necessary to revisit communications strategies, help articles, or even policies and operations. It’s also crucial for managers to be aware of how much pressure their support teams are under, so they can provide necessary assistance before burnout becomes a problem.

How do you calculate ticket volume? Record how many tickets you receive at regular intervals: day by day, week by week, or month by month. For visual analysis, plot these results on a line graph (like we do in our customer service report template, which you can download here).

If you notice spikes, try to pinpoint what may have caused them, such as product releases, global events, or even a social media crisis. That way you can devise plans and better allocate resources in the future.

6. Customer retention rate (CRR)

A customer retention rate measures the number of clients a company retains over a select period.

This metric is vital for companies that provide a regular or subscription-based service. Depending on the industry, companies may record retention rates weekly, monthly, quarterly, and annually.

To calculate customer retention rate, you’ll need to record:

S = Number of customers at the start of the period

E = Number of customers at the end of the period

N = Number of customers added during the period

With that information, calculate customer retention rate with the following formula:

[(E-N)/S] *100 = CRR

For example, say you have 100 customers at the start of your timeframe (S), 90 customers at the end of the period (E), and you added 15 customers (N). Your customer retention rate would be 75%.

7. Churn rate

Remember: Good customer service is about building long-term relationships with customers. Churn rate measures the percentage of your customers that leave your brand versus those that stick around.

Customer churn rate is measured for a specific amount of time. The most common timeframes are monthly, quarterly, and annual. 

To measure churn rate, take the number of customers you lose over the period and divide it by the total number of customers you had at the start of the period. Don’t include new customers acquired over the period in your equation, since that will skew your results.

Churn rate = (Customers lost over a period/Customers at the start of the period) x 100

You can also compare churn rates for different segments of your customer base to see if some products or product bundling strategies are creating greater customer success than others.

Source: J.P. Morgan Global High Yield & Leveraged Finance Conference presentation by Jean-François Parent, Vice President and Treasurer, Quebecor Inc., QMI and Videotron

8. Customer acquisition cost (CAC)

Customer acquisition cost tracks the average amount of money spent on sales and marketing to obtain each new customer.

This metric provides a partial way to track the ROI of social media, marketing, and sales teams. In an ideal situation, as teams scale their efforts, CAC should go down, and ROI should go up.

The formula for CAC is straightforward: The amount spent on sales and marketing over a given period divided by the number of customers acquired in the same timeframe:

CAC = Sales and marketing spend / customers acquired

For example, if you spent $10,000 on sales and marketing and acquired 20,000 customers, your cost per acquisition is 50 cents.

A lower amount is a better result—but it could also mean you have a low sales and marketing budget. That’s why it’s essential to view this figure in tandem with customer service satisfaction metrics and growth and performance results.

9. Customer lifetime value (CLV)

Customer lifetime value is a measure of how much you can expect to earn from a single customer over the entire lifetime of their relationship with your brand.

CLV that’s higher than the average initial purchase means that customers make multiple purchases from your company over time. That indicates a healthy brand relationship and great brand loyalty.

In order to measure CLV, you’ll need to have a few data points about customer behavior.

CLV = Average purchase value x Average purchase frequency x Average customer lifespan

For example, one research analyst estimated Amazon’s customer lifetime value as $2,283 from Prime members and $916 for non-Prime members. 

This is also an important metric for understanding how much you can afford to spend on social media advertising to acquire a new customer. 

10. Recurring revenue

Recurring revenue is another way to measure how many of your customers are sticking around. It can also give you a sense of whether people are upgrading or downgrading their recurring level of spend. 

You can measure recurring revenue on any time period that aligns with the renewal/notice period for your subscription products or services. The most common options are monthly recurring revenue (MRR) and annualized recurring revenue (ARR). 

To measure MRR, multiply your number of active users by the average monthly revenue per user. 

MRR = Number of active users x Average monthly revenue per user

11. Expansion revenue

The recurring revenue metric above measures how much you’re bringing in on a recurring basis. Expansion revenue measures how much revenue comes from upgrades, premium products, and so on. This is a great measure of customer success because it indicates customers are willing to spend more than the basic amount required to access your service.

To calculate expansion revenue, tally all the revenue brought in from add-ons, upgrades, and so on. 

To calculate expansion revenue per user, divide the total by the number of users. 

Expansion revenue per user = Total revenue from adds-ons and upgrades/Number of users

12. Revenue contraction

Revenue contraction is the opposite of expansion revenue. In this case, you’re measuring how much revenue is lost from downgrades. This is similar to churn in that it indicates people are not seeing success with their premium plans. 

Churn measures how many customers you lose entirely. Revenue contraction measures how much income you lose from customers who stick around but downgrade their plan. 

One interesting example of revenue contraction comes from streaming services, many of which have recently introduced ad-supported lower-cost plans. Research from analysis company Antenna shows that downgrades from an ad-free plan represented 29% of new additions to the ad-plan offering over the first 13 months. 

Source: Antenna

Keep in mind that while HBO MAx loses subscription money from these downgrades, they gain ad revenue. So it’s not a straight income loss. But it is still a good measure of the value customers place on premium versus basic plans. 

To calculate revenue contraction, tally all the revenue lost from downgrades. To calculate contraction per user, divide the total by the number of users. 

Revenue contraction per user = Total revenue lost from downgrades/Number of users

13. Average revenue per user (ARPU)

If you don’t have a subscription model, you don’t necessarily have recurring revenue. But it’s still important to keep an eye on how your average customer spend is changing over time. Customers who are experiencing success with your brand will generally spend more, while those who are less satisfied will spend less. 

To measure ARPU, divide your total revenue over a period by your average number of active users over that period. 

ARPU = Total revenue/Number of active users

Since ARPU is such an important measure of brand health, it often appears in earnings and investor reports. 

Source: Meta Earnings Presentation Q1 2023

14. Average response time

Average response time tracks how long it takes for customers to first hear from a support agent — it essentially measures the wait times involved in speaking with your team.

A short reply time is a mark of good customer service, especially online, where customers pretty much expect service on-demand. For this reason, many companies rely on bots to handle initial queries.

There are plenty of automation tools, such as Hootsuite Inbox, that provide average ticket handling time reports.

If you’d like to calculate it manually, use the following formula:

Average response time = Total time taken for first response to customer queries / Number of queries

15. Average resolution time

Average resolution time measures how long it takes for customer tickets to be resolved. For a customer and an organization, the sooner customer issues can be resolved, the better.

If you receive a high volume of customer queries, the more necessary it is to use tools to calculate resolution times accurately. Here’s how to calculate it manually:

Average resolution time = Total time spent on resolved cases / number of resolved cases

16. First contact resolution rate

Another key customer service performance metric is first contact resolution rate. Customers don’t like to be passed from one agent to another. Not only does this reflect poorly on the organization, it also often leads to longer resolution times.

If you have a low first contact resolution rate, chances are you’ll also have a high customer effort score (CES). Especially if the customer is asked to explain their issue more than once.

Like average response rate and resolution time, many platforms automatically calculate this for you. Here’s the manual formula, just in case:

First contact resolution rate = Number of cases resolved with one agent / number of resolved cases

17. Overall resolution rate

Not all cases end with a happy resolution. That’s normal. But a good resolution rate should always be the goal.

Here’s how to calculate your overall resolution rate:

??Overall resolution rate = Number of resolved cases / number of unresolved cases

If your resolution rate is low, it’s necessary to do a little more digging—especially if your customer retention rate (CRR) is low as well. Get more granular by looking to see if there’s a specific ticket category that’s bringing your overall resolution rate down and develop relevant solutions.

18. Preferred communication channels

In order to deliver top-rate customer service, it’s necessary to know where customers expect to receive support.

Keep track of the methods and platforms customers use to contact your businesses so you can allocate resources accordingly. For example, if you receive a high volume of support requests on Twitter, it may be time to open a customer service Twitter account.

Free customer service report template

We designed a simple customer service report template in Google Sheets to help you keep track of your customer service efforts month by month. To use or customize this template, go to “File” and “Make a copy” first.

The first tab has a tracker for all your primary and secondary customer service metrics.

The second tab contains a ticket volume tracker, visualized in a line graph where you can easily see which type of tickets you get the most of and identify any rising problem categories or spikes. You can also use this chart to communicate with the product team if, for example, you see spikes in returns, technical issues, or product availability.

The third tab contains all the formulas and definitions you will need to fill out your report, almost like a customer service metrics calculator. Below is a screenshot of the NPS calculator.

Save time on social messaging and improve your customer service metrics with automated responses, smarter workflows, handy surveys, and friendly chatbots — all in the Hootsuite Inbox.

Get Started

The post Customer Service Metrics: 2023 Guide + Free Template appeared first on Social Media Marketing & Management Dashboard.

Originally posted on July 6, 2023 @ 7:41 pm