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The Evolution Of Customer Service Metrics

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Customer Lifetime Value is the key metric for customer experience-oriented businesses. Average Handle Time, Customer Satisfaction, and Cost to Serve all have their place, but in today’s modern service landscape, LTV—mainly driven by repeat business or subscription over time—has to take the top spot. This evolution is ongoing, and successful businesses need to master it.

In this piece, we’ll cover:

  • The different metrics used to measure customer service—what they’re best for, and where they fall short.
  • The way your mindset towards your service organization and agents need to change to truly become omnichannel.
  • The real benefits of making Lifetime Value your focus.

Kustomer

Service used to be simple. Customers would contact your business over the phone, and you would solve their problems and answer their questions. Now, service has gotten a lot more complicated, and the metrics we use to assess customer service have not kept up to match our new omnichannel world.

The old metrics are operational in nature: Average Handle Time and First Contact Resolution being two prime examples. These metrics make sense for figuring out how cost-effective your service is. Productive agents can help more customers faster, lowering the cost of every interaction and saving your company money. The model is simple: agents work as fast as possible to resolve an issue, then move on.

Over time, contact centers have gotten more efficient. Agents started answering email queries and replying to concurrent live chats. Agents are now more efficient than ever before, using automation and chatbots to handle more interactions, lowering the cost of each. However, despite greater efficiency, many companies still operate their contact centers purely as cost-centers. Customer queries are treated as a necessary evil that needs to be dealt with as cheaply as possible.

More companies have begun to adopt a service mindset. Their job isn’t just to provide support, but to make customers happier. This means that agents are empowered to “save the sale” and offer discounts discounts or personal insights and suggestions to ensure customer satisfaction. They take into account operational metrics, but also track how satisfied their customers are with their business using Customer Satisfaction and Net Promoter Score surveys (read our post about the best metrics for tracking customer service quality here.) These metrics are a great way to know whether your service is effective on a macro-level, but they won’t tell you everything you need to know.

CSAT measures if your customers are happy with the service they’re receiving in the moment. That’s good, but you’re forgetting one thing. What about the value of your customers’ behavior after you’ve engaged with them?

CSAT and NPS only capture the tiny minority of customers who take your survey. This is not representative, because they’re more likely to respond if they’ve had a highly positive or negative interaction. Plus, in most cases they will only speak to the interaction they just had.

For example, if you’re a tech retailer and a customer has had problems with their new computer monitor, calling a dozen times to get it fixed, then they are definitely not satisfied with your brand. There’s a good chance they’ll talk about their frustrating experience with their friends, and even amplify their complaints across social. But, after their twelfth call, the agent may resolve their issue—they’ll be so happy that they’ll give them a great CSAT score. However, this doesn’t reflect what they really think about your brand. It’s just a siloed interaction, and this customer is still very likely to switch providers.

Your agents should not just solve one-off transactions, they should do more. The customer’s experience across their entire lifetime with your business is where you need to focus. Agents should prioritize getting customers to come back again and again, giving top-quality, personal service and offering incentives for being a valuable customer. CSAT and NPS won’t tell you everything you need to know in order to do that across channels.

Sentiment based on natural language processing is far more objective: It accounts for every interaction across channels, and it captures most or all of these interactions in an unbiased way. It’s highly efficient to know what your customers are saying about your business, but you still don’t know what’s going unsaid. Only 1 out of every 26 customers complain if something goes wrong , so sentiment is still only measuring a fraction of what’s going on beneath the surface.

Understanding all of your customers’ actions and behaviors, in conjunction with all the previous metrics, is the only way to get a complete view.  Beyond when they’ve contacted you for service or support, you need to know if their buying habits have changed, if they’ve abandoned items in their cart, changed their subscription tier, made a return or exchange, and talked about you on social media.

We know that a better experience drives revenue by increasing customer retention and loyalty: A 5% increase in customer retention can increase a company’s profitability by 75% , according to Bain & Company. The key metric for your business is lifetime value, and the only way you can know that is by focusing on all the behaviors and activities around your brand and products—and the value your customer experience adds to the bottom line. When you’re able to do that, then you can shift the focus of your customer experience organization towards driving revenue by increasing lifetime value. Service doesn’t have to be a cost-center, it can be a revenue center once you shift your mindset towards totally understanding and serving the customer.

From a “service as a cost-center” mindset, a 2-hour call with a customer that doesn’t end up making a purchase is disastrous. Your agent could have answered a dozen calls in that time, and the cost of that interaction is a quarter of a day’s wage for an agent. However, if that customer becomes a loyalist for life, advocates on your behalf across social media, and ends up making 20 more purchases, then that agent’s time spent on that customer is probably well worth it.

As customer service capabilities evolve, so too must our approach to how we treat our customers. Lifetime value is the key metric for a modern service organization, and without all the customer context, you’ll never know how much you stand to gain by putting your customers’ needs first. Instead of driving revenue, you’ll just be answering the phone.

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