How to Measure Customer Service

Lecturer Broadcast

Click here to view an explanation of how to measure customer service.

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Explanation by lecturer Johan Kleingeld of Edge Consulting, an expert on customer services.

Customers are not only buying your products. They also buy expectations. They expect that the product they buy will be according to the promises made by you and the manufacturer. They expect that it will work and if not, that you will replace it. How you handle the customer during this transaction will also determine whether the customer will return again.

Service as a Product

If you find it difficult to attach a value to a service, see it as a product:

• A service is produced as soon as it is delivered.
• Service is delivered the moment you have contact with a customer.
• You cannot revoke a service if it was of poor quality.
• Service is subjective. Every customer has his/her own idea of what is good service.

The Formula for the Measuring Customer Service

The following must be evaluated:

• How many employees handle a customer before the end of the transaction?
• How many employees handle the customer after the transaction is completed?
• If a transaction is stopped because of poor service, what are the minimum and maximum worth money-wise that is lost by the organisation?
• What is the average loss? (count the minimum and maximum together and divide by two)
• If a dissatisfied customer tells it to 5 potential customers, what will the potential loss be? (multiply the average by 6).
• Divide the total loss by the total of employees before, during and after the transaction.

Method 1: Measure Your Customer Service Levels by Statistics

Where possible, put systems in place to assess your performance in business areas which significantly affect your customers' satisfaction levels. Identify Key Performance Indicators (or areas) (KPIs) which reflect how well you're responding to your customer's expectations. Put internal systems in place whereby you can gather information regarding your customer service performance.

For instance, you might track:

• Sales renewal rates.
• The number of queries or complaints about your products or services.
• The number of complaints about your employees.
• The number of damaged or faulty goods returned.
• Average order-fulfilment times.
• The number of contacts with a customer each month.
• The volume of marketing material sent out and responses generated.
• Time is taken from order to delivery.

Your customers and employees will be useful sources of information about the KPIs which best reflect key customer service areas in your business. Make sure the things you measure are driven not by how your business currently runs, but by how your customers would like to see it run.

Method 2: Measuring Customer Satisfaction by Means of Research

There are several ways to gather input from customers. The simplest way to find out how customers feel and what they want is to ask them. If you have only 20 customers, you can talk to each one personally. The advantage of this approach is that you'll get a personal "feel" for each customer. The disadvantage is that you'll gather different information from each customer depending on how the conversation goes.

Customer surveys with standardised survey questions insure that you will collect the same information from everyone. Remember that few of your customers will be interested in "filling out a questionnaire". It's worked for them without much reward. By launching a customer survey as an attempt to find out "how we can serve you better", your customers will feel less pressurised.

Definitions: Market research is a form of business research and is generally divided into two categories:

• Consumer market research and
• Business-to-Business (B2B) market research, which was previously known as industrial marketing research.

Consumer marketing research studies the buying habits of individual people while business-to-business marketing research investigates the markets for products sold by one business to another.

Market research uses the following types of research designs:

Based on questioning:

Qualitative marketing research - generally used for exploratory purposes, a small number of respondents - not generalisable to the whole population - statistical significance and confidence not calculated - examples include focus groups, in-depth interviews, and projective techniques.

Quantitative marketing research - is the application of quantitative research techniques to the field of marketing. It has roots in both the positivist view of the world and the modern marketing viewpoint that marketing is an interactive process in which both the buyer and seller reach a satisfying agreement on the "four Ps" of marketing: Product, Price, Place (location) and Promotion.

Based on observations:

In ethnographic studies, by nature qualitative, the researcher observes social phenomena in their natural setting - observations can occur cross-sectionally (observations made at one time) or longitudinally (observations occur over several time periods) - examples include product-use analysis and computer cookie traces.

In experimental techniques, by nature quantitative, the researcher creates a semi-artificial environment to try to control factors, then manipulates at least one of the variables - examples include purchase laboratories and test markets.

Questionnaires can be Administrated in Three Ways

Personal Interviews: These can be costly and time-consuming, but they are ideal in that they permit simultaneous observation of the respondent and the surroundings.

Telephone Interviews: This method is gaining favour because it gives quick results. It combines flexibility and efficiency, provided it is done under close supervision.

Mail Surveys: This type of survey technique is rigid and often slow. It requires incentives to achieve acceptable return rates. For example, a company in South Africa attached a two-rand coin to the cover letter in a survey of South African architects and promised to donate five rands to the “Save the Rhino” fund for every returned questionnaire. The results were three times higher than expected.

Here are a few of the possible dimensions you could measure:

• Quality of service
• Speed of service
• Pricing
• Complaints/problems
• Trust in your employees
• The closeness of the relationship with contacts in your firm
• Types of other services needed
• Your positioning in clients' minds

Other Ways to Measure Customer Satisfaction

If, however, you have too many customers to ask personally, or the number of customer touch-points is too many, there are other ways to collect information in order to measure customer satisfaction. They are:

Satisfaction Surveys:

A survey should ask customers for their views on products and on the standard of service they receive from the company or its distributors. Customers are asked to indicate their degree of satisfaction using a scale such as “are you completely satisfied, very satisfied, satisfied, not very satisfied or very dissatisfied?” or “on a scale of 10, how satisfied were you with …? where 10 is excellent, 5 is reasonably satisfied, while 2 or less is very poor."

By implementing a customer satisfaction survey, you demonstrate that your company is serious about customer care. A letter, which explains the reasons for the survey, should accompany the survey questionnaire and it should invite customers to talk directly to the staff if they have any concerns.

One way of maximising the benefit is to get staff to contact customers directly if they do have concerns. Feedback to customers on what action steps will follow the survey results is essential.

When the results of surveys are measured and compared with other dealers or manufacturers, take the opportunity to tell customers about any important achievements. If for example, a distributor achieves an extremely high level of satisfaction and wins an award, let customers know and invite them to take part in the celebrations.

Internal Customer Surveys

This is carried out to test the ‘people image’ of the company. It is the climate of the organisation that matters. For example, staff are required to fill in survey documents on what they like and dislike about their jobs.

External Customers Surveys

This type of survey is carried out to test what customers like and dislike about the company and its service. Many hotels, for example, leave questionnaires in bedrooms and invite guests to give their comments on standards of food and accommodation.

The following variables can also be included in your measurement:

Reliability: the ability to provide what was promised.

Assurance: the knowledge and courtesy of employees and their ability to convey trust and confidence.

Empathy: the degree of caring and individual attention provided to customers.

Responsiveness: the willingness to help customers and provide prompt service.

Tangible aspects: Tangible aspects include an evaluation of the company’s physical facilities and equipment. It may also include an evaluation of the appearance of the personnel. The variables are ideal for general feedback, but talking regularly to customers to determine what aspects of the service are making them happy and/or letting them down can have the really useful, directly applicable information.

Take the following into consideration:

Which aspects of the product or service should your customers comment on?

How frequently should you ask your customers for their opinions?

How do you intend to use the results of the surveys?

Do you tell customers about your performance in customer satisfaction?

Do you run a customer satisfaction award scheme for staff?

Do you have a mechanism for responding to specific customer comments?

Focus Groups

Focus groups are good ways to get informal input from a group of customers or prospects. You bring in 5-10 customers or prospects and ask them questions or have them react to the material. You can pay a professional facilitator and videotape the whole session, or just lead an informal discussion yourself. In either case, you have a chance to gather ideas about customer needs, reactions to your company, suggestions for new services, and so forth. In addition to individual responses, you get ideas that develop as the group reacts to each other's responses.

Features of focus groups include:

• An interactive group discussion led by a moderator.
• An unstructured (or loosely structured) discussion where the moderator encourages the free flow of ideas.
• Usually, 8 to 12 members in the group fit the profile of the target group or consumer.
• Usually lasts for 1 to 2 hours.
• Usually recorded on video.
• The room usually has a large window with one-way glass - participants cannot see out, but the researchers can see in.
• Inexpensive and fast.
• Can use computer and internet technology for online focus groups.
• Respondents feel group pressure to conform.
• Group dynamics are useful in developing new streams of thought and covering an issue thoroughly.

Client Advisory Groups

Another way to get regular input from customers is to put together an advisory group. This can act like a focus group but is set up to provide input over time. You may pay members, or simply buy them dinner every quarter.

There are many benefits to such groups. They give you a source of input from the customer's viewpoint. They provide a sounding board for specific questions. They enhance your relationship with good customers who become more committed to your success. And they can move relationships with prospects forward.

Advisory boards are a much-underused way to improve customer service, develop new services, and encourage repeat business. Even the smallest businesses can use them effectively.

Service Audit

If there is a great deal of upheaval or confusion in the marketplace with rapidly changing customer satisfaction criteria, then the service audit may need to be a more creative process and take the form of a market survey.

The simplest way to obtain information is to talk to customers face-to-face. Asking customers what they like and dislike about our products and services and what they can and cannot depend upon when dealing with you is invaluable whether yours is a large corporation or a one-man business. Senior management should be prepared to go out and get first-hand information if necessary. They should be able to listen unobtrusively to their staff interacting with customers. Raymond Ackerman of Pick ’n Pay has been known to spend lots of time at branches and has even been seen pushing trolleys for old ladies while he has a chat with them. In this way, he has developed a very personal understanding of how his customers think.

The most important element for personal service audits is active listening. To listen to someone is a requirement for responding, but it is usually taken for granted or looked upon as too much trouble. Sometimes a person does not listen at all but focuses on that person's responding answer. This lack of attention destroys the communication process.

The way a person responds informs the partner in the communication process that they are listening or not. They will know the quality of your listening, whether you are active about it or just hearing the sounds without registering the meaning.

Click here to read more about techniques for gathering information.