3 Simple Ways to Measure Customer Service

April 28, 2016 / Reading: 6 minutes

When things get hectic in business it can be easy to forget what we are really there for – to serve our customers. Customer service is not just something we can “set and forget”, but instead requires active and ongoing effort, even if we think we”re already doing an excellent job.

But how do we even know how well we are doing in the first place? What”s the best way to measure the success of our customer service strategy over time?

Most businesses, when questioned, would say that achieving a high customer service satisfaction rating is crucial to them, and let”s face it – it should be. Without happy customers, no business is going to remain in business very long.

Despite its importance, there is a perception out there that measuring customer satisfaction is not all that straightforward – at least not as simple as a total number of sales, total revenue or any other of the yardsticks by which a successful business is measured today.

Without happy customers, no business is going to remain in business very long.

After all, a dollar is a dollar is a dollar. But how exactly do you quantify “a happy customer”? Surely happiness means different things to different people right?

While this is certainly true, it is also true that there are some well-established, proven methods used by successful companies for measuring customer service satisfaction. Rather than re-invent the wheel, companies can draw on these to measure satisfaction with the services that they provide.

1. The Net Promoter Score (NPS)

Arguably one of the most widely used customer satisfaction measures in circulation, the Net Promoter Score measures how likely (on a scale of 0 to 10) it is that customers will recommend your product or service to one of their friends.

The exact phrasing of the question is:

How likely is it you would recommend us to a friend? With 10 being “extremely likely” and 0 “not at all likely”. The score divides customers into 3 groups: “promoters” (scores of 9 or 10), “passives” (7 or 8) and “detractors” (0 to 6). The NPS is calculated by subtracting the percentage of detractors from the percentage of promoters.

Originally developed by Fred Reichheld and a Bain research team in The Ultimate Question (2006), the Net Promoter Score has been widely applied by firms all over the world. Some of its most notable adherents include Apple, eBay, General Motors, Sony, and Facebook, among many others. Its developers claim that companies with high NPS scores grow at more than twice the rate of competitors.

One of the key advantages of the Net Promoter Score is its very simplicity. The measure is contained within a single question, making it easy to implement with customers wherever time is of the essence in a business transaction.

However, its simplicity is also one of its potential drawbacks. When used in isolation, it tells you little about a very important question: why your customers feel the way they do about your product or service.

This is why you should always make sure you give customers an option to follow up their NPS rating with some commentary explaining why they have chosen a particular score. Gaining valuable feedback such as this gives your business an opportunity to identify and prioritize areas for improvement.

2. Repeat Customer Rate

A lot of businesses are heavily focused on growth via new customer acquisition. There is nothing wrong with this of course, unless it comes at the expense of pleasing your existing customers.

There are in fact many good reasons to encourage your existing customers to hang around. Some oft-quoted research reported by Farris et al (2010) in the book Marketing Metrics shows that “a repeat customer has at least 60% – 70% chance of converting,” while the probability of converting a new prospect sits at only 5 to 20%.

So regarding future revenue, you may be well advised to devote as much thought and attention to your current customers as to the customers you haven”t yet met. This is not only relevant because your current customers are much more likely to buy from you, but also because they are the best source of future customers for your business by way of referrals and recommendations.

How then to best calculate repeat customer rate? To keep it at its simplest, it is exactly as it sounds – as the Sweet Tooth Rewards blog notes, it is the number of customers who have purchased from you more than once expressed as a percentage of your total number of unique customers ever.

You can make it more complicated if you like, but if you are just getting started with customer service metrics, this should be sufficient to do the trick nicely.

3. Average Customer Review

An oldie but a goodie, the customer “star rating” for your service is still alive and well on the internet. Under this system, sites like Yelp and Google allow customers to rate your business online, along with commentary, most usually based on a 1 to 5-star rating.

It pays to take careful note of such online customer reviews of your business, and not just because the feedback can be useful in improving your products and services. Answering negative reviews in a positive, helpful and timely manner shows you to be a responsive and professional organization who cares about customer service, and allows you to put out any fires before they take hold.

Do be vigilant about monitoring your online reputation –the evidence is there that customers do take star ratings into account when making a purchase. Recent extensive research undertaken by Yotpo.com indicates that products with higher ratings in turn get more reviews and purchases than those with lower scores. It”s not quite clear where the cause and effect lies exactly, but what does seem evident is that the system seems to operate as a type of “virtuous circle”, with higher rated products and services given more exposure, which drives more sales, which results in more reviews, and so forth.

Having said that, don”t take the review system so seriously that you are tempted to influence it by doing something shoddy like purchasing fake reviews. Time Magazine, among others, has previously reported on scams where freebies are offered by companies in exchange for glowing online reviews, and the internet abounds with requests for reviews in exchange for cash. Instead, let your outstanding customer service record speak for itself, and your customer ratings will reflect this.

How well is your team doing on customer service? Without proper measurement, you will never know. There are many reasons why businesses neglect to measure customer service performance. Commonly, it boils down to a perception that measurement is too hard and too time-consuming. But the truth is, there is a lot of value to be gained from keeping things simple. Your team will thank you for it, as will your customers.

Parker Davis

About Parker Davis

Parker Davis is the CEO of Answer1, a leader in the virtual receptionist and technology enabled answering services industry. He believes that the application of data analytics, investment in technology, and fostering a positive company culture together create highly efficient and scalable growth companies. In 2016, Answer 1 will achieve record revenues while also being awarded the Top Companies to Work For in Arizona award. Parker is also the Managing Partner of Annison Capital Partners, LLC, a private investment partnership.

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