Customer service KPIs: Best practices to measure performance

Knowing how to find the signal in the data noise is what allows the best support teams to keep providing quality customer service, high customer satisfaction, and a high-performing team. But with AI transforming customer service as we know it, what do support leaders need to know about measuring success in this new era?

Setting the right key performance indicators (KPIs) is critical to ensuring you’re accurately tracking progress. In the world of customer service, a helpful KPI can signal what is or isn’t working so that appropriate actions can be taken. Incorrect or unhelpful KPIs can mislead teams into believing that certain aspects of customer service are not functioning properly – which could lead to unnecessary changes that negatively affect customer service teams and customers.

Because customer service is vital for most businesses, it’s important to understand the nuances of customer service KPIs and what they can, and can’t, tell you. In this article, we will define KPIs that are specific to customer service, demonstrate how to start incorporating certain KPIs based on your existing team structure and access to information, and share several popular examples of KPIs that you should track.

What is a customer service KPI?

KPIs are any series of measurements, quantitative or qualitative, that can track a company’s operations regarding a specific goal or objective, and if those operations are successful or not in achieving those goals.

Customer service KPIs specifically track and measure data that is most valued by the customer service teams and help determine how the overall team is performing. Tracking KPIs allows you to reward teams that are adding value to your company, as well as identify issues in order to fine-tune operations and improve productivity.

The importance of customer service KPI metrics

Your customer service KPIs are a fundamental part of providing great support to your customers – they provide an overview of your team’s performance, and your customers’ experience. Without them, you are flying blind – unsure of what is working and where there are problems.

But your customer service KPIs have broader importance beyond just your support team.

Some customer service KPIs can influence how other company teams may operate. For example, falling CSAT might suggest a new feature is not resonating with users, and your product team will need to be aware of that data point as they assess their roadmap.

Like other fields, customer service is in flux with the rise of generative AI. Research from our State of AI in Customer Service Report shows that 69% of support leaders are planning to invest more in AI in the next year.* These investments will aim to use AI to enable more compelling interactions with customers and quicker resolutions, freeing support time to focus on other activities and value creation.

KPIs need to account for these AI changes and can help make sure that you’re using AI to help customers, rather than using AI just for the sake of using AI.

Understanding KPIs unique to customer service

Now that we've covered the importance and necessary nuance of what makes a good or bad KPI, we need to share some actual examples of KPIs for customer service.

First, it’s important to know that there are three primary categories that your KPIs can measure:

• Customer satisfaction: A measure of customer service interactions with customers. This customer service KPI answers how happy your customers are with a product or service; if customer service teams are consistently floored with new or repeating support tickets; and if your customers are likely to recommend your company.

• Operational efficiency: A measure of customer service performance as a team. For example: How quickly are support tickets resolved? How long do customers usually wait for their problems to be fixed, or even to hear back from a representative? Are representatives able to resolve most issues right away, or do they have to refer customers to other team members?

• Business value: A measure of customer service’s added value compared to other teams in a company. For instance, how does interaction with your customer service team affect customer retention?

How do you measure KPI for customer service?

There are many ways to measure customer service KPIs, from support ticket numbers to customer wait times, but most KPIs fall under three broad categories: customer satisfaction (customer service interacting with customers), operational efficiency (customer service working as a team), and business value (customer service within a company).

What to consider before incorporating a specific customer service KPI

Whatever part of customer service you’re trying to measure, there are a few key steps to take to make sure you’re using the most appropriate KPIs.

First, discuss potential new KPIs with your more senior customer service representatives or engineers. More seasoned team members can give feedback on what KPIs are achievable, what measurements don’t exist at the moment but are worth considering, and what metrics are not realistic or relevant.

Having the feedback and perspective of your team also makes these KPIs more meaningful and motivating. It’s better to work towards a specific benchmark when it’s clear that the benchmark is valuable and achievable.

It’s also worth applying a weighted KPI model in which certain KPIs are more valuable than others, or to account for KPIs that are more volatile week by week or season by season.

It’s important to avoid vague or irrelevant KPIs, too. There’s plenty of risk in using unhelpful or impersonal metrics that don’t accurately reflect your team’s aims or cause team members to lose sight of the bigger, more important picture.

You should always ask:

• Are your KPIs creating the right incentives?

• Are a team’s KPIs aligned with the company’s end goals?

• Are customer service representatives focusing on helping customers, or just trying to hit some metric?

• Does your team feel the value of your KPIs, or are they just random numbers that stress out your representatives?

Finally, it’s important to think beyond numbers. You must consider tracking soft skills that contribute to customer service success. At Intercom, we have support values that reflect the skills and attributes for positive customer service, which include “thriving under pressure,” “connecting personally with empathy,” and “being an owner.” It’s important to not flatten these values as just numbers. Not every positive quality can fit neatly onto a chart or graph.

How do you set up KPIs for customer service?

Before putting KPIs to use, review them with your senior customer service team members to make sure you’re focusing on practical and relevant metrics. It’s also important to weigh the most valuable KPIs and account for peaks and valleys in business cycles, as well as track support values that aren’t number-based but still indicate customer service success.

Examples of customer service KPI metrics

Below are a few popular customer service KPI metrics that can be used across businesses and industries. Regardless of your company’s focus or goals, you’ll want to at least be mindful of the following ways you can measure the quality and efficiency of your customer service.

Average Resolution Time

Average resolution time is the amount of time it takes for a customer service representative to complete a ticket from start to finish.

The quicker the resolution time, the more it reflects effective customer service that can keep your customers coming back for more business. However, you must account for each ticket’s complexity; of course, easier problems will naturally yield shorter average resolution times. Longer average resolution times could signal that your team is dealing with some inefficiencies, or that you may be understaffed to handle more complex problems.

To calculate the average resolution time, take the time it takes to resolve all the tickets within a specific time divided by the total number of resolved tickets within that same time. To gain a more accurate number, consider the pending and holding times of support tickets and the problem’s complexity.

Call center occupancy

In the context of call centers, occupancy is a percentage that tracks how much time your call center representatives spend assisting customers. This includes the time it takes to answer customer questions, pick up the phone when talking more thoroughly with customers, and work through the support ticket backlog. This does not include team meetings or any time spent on training.

High occupancy percentages signal that your representatives spend most of their time handling customers, while low percentages could mean that they have more time to serve more customers or help with other activities. You don’t want too high or low of an occupancy rate; a nice balance means that representatives are staying busy but aren’t in danger of burning out, which could then hurt future customer service and team morale.

To calculate occupancy, divide the total time it takes for a representative to handle these support tasks with the total time that the same representative logged in for billable hours to handle support. Multiply this number to turn it into a percentage. Again, the “right” occupancy rate will depend on your industry and the size and expectations of your team.

First contact resolution (FCR)

First contact resolution (FCR) measures how often customer queries are resolved after the first encounter (call, email, text, chat) with a company’s support team. FCR is sometimes known as “one-touch resolution.”

A high FCR percentage signals that most of your customers don’t have to be transferred to another representative and that there’s no need for follow-ups. Low FCR rates could spell frustration from customers who are waiting long times, which could then lead to lower overall satisfaction.

To calculate the FCR rate, divide the number of tickets that are resolved during this initial interaction by the total number of submitted tickets.

Like with other KPIs, be mindful to account for a ticket’s complexity that might yield a smaller FCR out of necessity. Still, small FCRs are a sign to further investigate if any improvements can be made.

Net promoter score (NPS)

Net promoter score (NPS) measures customer loyalty toward a company’s product, service, or overall brand, measured as a score from -100 to +100.

This is a measure that comes from sending out customer surveys and asking questions like, “How likely are you to recommend us to a friend or colleague, on a scale of 1 to 10.”

Customers who respond highly are the most likely to promote your services, so it is worth continuing and deepening these relationships. Low-scoring customers should not be counted on to recommend your company to their networks, but it’s important to value their feedback to see what could be done.

Customer satisfaction (CSAT)

Customer satisfaction (CSAT) tracks how happy your customers are with your business. CSAT is another qualitative KPI, so instead of relying on some equation, you can send out custom customer surveys that determine customer satisfaction with different aspects of the service experience, along with providing a space for written feedback to give more details to share with teams. You can then calculate the percentage of positive ratings out of the total number of responses.

Another method is to add one question (“How did we do?”) to the end of each support email and give a few simple answers (Good, OK, or Bad). This small step can add up to a lot of feedback across normal business hours, instead of relying on larger, more time-consuming surveys.

How to improve customer service KPIs

With thoughtful planning, these metrics can help you better understand your existing data and use information to help you answer difficult questions on how you can better serve your company and your customers.

Though each KPI can lead to a different action, here are some general steps you can take to improve most customer service KPIs:

• Create or build out your internal knowledge base to offer your representatives quicker or more thorough solutions.

• Incorporate AI-powered chatbots that can quickly recommend and execute simple solutions or next steps.

• Ensure that your ticketing software is sending the appropriate tickets to the right people to cut down on team member transfers.

• Review the format, content, and frequency of your customer surveys to make sure they are accessible and offer customers a chance to give meaningful feedback.

• Consider adding additional customer service channels (live chat, social media messaging) that can solve simple problems, freeing up your other channels for more complex and time-consuming issues.

• Make sure you’re properly training your representatives.

How do you improve KPIs in customer service?

Based on your existing KPIs and goals, various methods can help improve one or multiple KPIs. Consider cleaning up your knowledge base and customer surveys, incorporating more chatbots or customer service channels, making sure your ticketing software is working properly, and your representatives are properly trained.

Enhance your KPIs — and your customer service — today

Whether you’re new to KPIs or need to reevaluate your customer service strategies, the concepts covered in this article should inspire some new ideas that are worth exploring, regardless of your industry.

For more about customer service KPIs, read about how we keep customer support KPIs meaningful for support teams and how customer service metrics are changing in the age of AI.

Source * Intercom, 2023 State of AI in Customer Service Report. Report pulling responses from 1,000+ global support professionals on how AI is transforming the customer service industry and how they’re making the most of this once-in-a-generation shift.