Peter Drakeley 19 April 2018 4 min read What's in this article? What are Key Performance Indicators?Measuring customer service levelsCustomers can make or break your businessMeasuring customer service levelsCustomer retentionHow can your supply chain processes help improve customer service levels?What comes next? What are Key Performance Indicators? Key Performance Indicators (KPIs) act as a set of quantifiable, measurable values that demonstrate how effectively your business is performing in relation to its strategic objectives. Businesses often track multiple KPIs to evaluate how successful they are at reaching targets. There’s a wide range of KPIs that can closely monitor and help improve operational performance, but today we’re going to focus on customer service, the importance of measuring customer service and how good supply practices can positively influence customer satisfaction and retention. Measuring customer service levels When it comes to customer satisfaction, businesses often monitor their customer service levels. Offering the best customer service is essential to keeping customers happy, for organisational success and to ensuring you stay ahead of the competition. Customers can make or break your business Customers are keener than ever to review an organisation’s customer service levels before doing business. 88% of customers look at company reviews online and are influenced by them before they decide to purchase a product or service. Poor reviews can therefore negatively affect your sales and it’s estimated that a single negative review can drive away 22% of customers. Negative reviews can also be damaging to prestige, profitability and the trustworthiness of your brand. Customer service level KPIs can be used to measure overall customer satisfaction and track any changes over time. Customer satisfaction is a great indicator that your business is on the right track. Measuring customer service levels Net Promoter Score (NPS) is a simple and standardised KPI to determine customer satisfaction. It is also a globally recognised and commercially meaningful score. NPS puts your customers into three categories: promoters, passives, and detractors. It measures how willing your customers would be to recommend your services. This allows you to determine how well you’re performing through the eyes of your customers and helps identify areas for improvement. Customer retention It’s a well known fact that it costs around 5 times more for your business to acquire a new customer than it does to retain an existing one. NPS can be used to understand what impacts your customers’ experiences so you can continually improve, resulting in an increase in acquisition and retention. Customer loyalty can be viewed via a simplified framework called the loyalty loop. When your customer makes their first purchase, they will have spent time considering and evaluating your offer, before making the purchase. They then enter the second ‘loyalty loop’ where they enjoy your product or service, become an advocate of your business and bond with your brand, before coming back for more. How can your supply chain processes help improve customer service levels? Successful order fulfillment is key to keeping customers coming back for more.They need to know that you have the right products in stock to be able to meet their delivery expectations. Here’s a few ways that your inventory management processes can help ensure high customer service levels. Increase supply chain efficiency An inefficient supply chain can lead to a host of problems such as stock outs, slow deliveries and incorrect orders.This will no doubt lead to poor customer service levels that will drive your customers away – and into the arms of your competitors. Even the most loyal customers will get fed up if stock availability is poor, orders are incomplete, or deliveries are constantly late. By automating your supply chain management processes you can improve efficiency and raise the bar in terms of your productivity and service levels. Introducing new technologies to speed up simple tasks will improve productivity, but also bring a level of consistency to your operations. Automation allows you to receive and use real-time data about your supply chain efficiency. With such transparency you can spot where the problems lie and make changes for continual improvement. Automating your processes also helps bring a level of agility and resilience to your operations, so you’re better able to adapt to changing customer demands, external market influences or internal operational challenges. In retail, consumers are fickle and nearly always use sellers that can fulfil their needs quickly. In the B2B world, customers tend to use manufacturers and suppliers they can depend on. They need to know that their supply chain isn’t going to be affected by delays or inaccuracies and will often look to work with partners that have the technology available to help prevent such issues. Accurate forecasting and procurement Being able to accurately predict product demand is necessary to ensure you can provide customers with the products they want, and when they want them. If you underestimate demand then you run the risk of stock outs and lost sales. Demand forecasting will help you stock the right products so that you can fulfill customer orders with the shortest possible lead times. ABC analysis Inventory classification methods, such as ABC analysis, can help inventory management teams to improve current customer service levels. Using this method, you can classify products in your warehouse based on their value to the business. You can then ensure you’re stocking the most important products which bring in the most profit. This is also a good way to help reduce excess stock of items that are less important, freeing up warehouse space and cash to invest in new products that could spark the interest of your customers and keep them loyal. What comes next? High customer service levels are critical to the success of most businesses. Ensuring stock availability and order fulfillment will help drive customer service levels and encourage positive customer reviews. But don’t just measure the customer service level KPI in isolation of other metrics, there are a host of inventory management KPIs that will help you up your game when it comes to satisfying your customers with excellent service. 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