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The Importance of Customer Service Key Performance Indicators to Improved Profitability

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. Customers. WHY Customer Service ?.

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The Importance of Customer Service Key Performance Indicators to Improved Profitability

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  1. The Importance of Customer Service Key Performance Indicators to Improved Profitability

  2. Improving Profitability Traditionally Financial Performance • Business Growth Models • Franchise • License • Direct Sales • Distribution Products/Services Customers

  3. 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

  4. Harvard Business Review University of Michigan National Quality Research Centre American Customer Satisfaction Index (ACSI) Hedge Portfolio 200 companies, 40 sectors, 65K consumers/year

  5. Customer Experience Detractors • Telephone Techniques • Staff attitude • Poor problem handling • Inappropriate account charges • Response times • Accuracy of information • Xerox customer loyalty research

  6. 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

  7. 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

  8. 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

  9. 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

  10. Customer Service Errors • Zero dissatisfied customers • Over service complaints • Segment customer profitability • Customer lifecycle expectations sales, service etc

  11. 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

  12. Summary • Tap into Customer Services • Immediate opportunity • KPIs simple to implement • Requires minimal investment • Low risk • Motivational • Potentially huge return

  13. Further Information www.customerservicemanager.com • Online free advice and articles www.kpilibrary.com • 5100 KPIs Process and Industry Sector www.instituteofcustomerservice.com http://www.surveymonkey.com/

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