The Importance of Customer Service Key Performance Indicators to Improved Profitability
Improving Profitability Traditionally Financial Performance Business Growth Models Franchise License Direct Sales Distribution Products/Services Existing customers New products and services New customers and markets Diversification Customers
WHY Customer Service ? Economy impacts customer behaviour Competitive marketplace Harvard Business Review – proven link One point change on Customer Satisfaction Index = 4.6% change in market value Consistent superior customer experience = more stable cashflow and greater gains in shareholder value
Harvard Business Review University of Michigan National Quality Research Centre American Customer Satisfaction Index (ACSI) Hedge Portfolio 200 companies, 40 sectors, 65K consumers/year
Customer Experience Detractors Telephone Techniques Staff attitude Poor problem handling Inappropriate account charges Response times Accuracy of information Xerox customer loyalty research
Key Performance Indicators Specific performance measure Important to long-term success Consistently quantifiable Correlation to area of improvement Foundation to maintain competitive advantage Monitor to identify and improve
Customer Focus Strategy Benefits Optimise Operations Produce additional profit as more frequent orders Less price sensitive More likely to remain loyal longer Minimise operating expenses return fewer products reduce sales and marketing costs reduce warranty and service costs Promotion More likely to recommend company and products PR Opportunities Case studies Web quotes
a) Customer Satisfaction and Loyalty Impact on Staff The Service Profit Chain 1997 * 1st set of hard data quantifying links between: a) Customer Satisfaction and Loyalty b) Employee satisfaction, enthusiasm, loyalty, commitment and capability with c) Financial Results Gallup 2003 Productivity, Retention, Safety up 50% Profits up 33% Customer Loyalty 56% * The Corporate Leadership Council
Sample KPIs First fix % Number of complaints Response times Number of repeat orders in given time period Average order value/profit/volume % Client relationships <12 months
Customer Service Errors Zero dissatisfied customers Over service complaints Segment customer profitability Customer lifecycle expectations sales, service etc
Customer Service Trends Transactional vs. Relationship Focus on loyalty Customer retention cost 10:1 Referrals Poor experience spread x 20 Feel good factor Focus on highest lifetime value Survival v Short term v Long term
Summary Tap into Customer Services Immediate opportunity KPIs simple to implement Requires minimal investment Low risk Motivational Potentially huge return
Further Information www.customerservicemanager.com www.kpilibrary.com Online free advice and articles www.kpilibrary.com 5100 KPIs Process and Industry Sector www.instituteofcustomerservice.com http://www.surveymonkey.com/