Improving customer service levels with better supply chain management
Peter Drakeley
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 their success in 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 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 are influenced by looking at online company reviews before purchasing 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 damage the prestige, profitability and trustworthiness of your brand.
Customer service level KPIs can measure overall customer satisfaction and track changes over time. Customer satisfaction is an excellent indicator that your business is on the right track.
Measuring customer service levels
Net Promoter Score (NPS) is a simple and standardised KPI for determining customer satisfaction. It is also globally recognised and commercially meaningful. NPS categorises your customers into 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 five times more for your business to acquire a new customer than to retain an existing one. NPS can be used to understand what impacts your customers’ experiences so you can continually improve, and increase 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 returning for more.
How can your supply chain processes help improve customer service levels?
Successful order fulfilment is key to keeping customers coming back for more. They need to know that you have the right products in stock to meet their delivery expectations. Here are a few ways your inventory management processes can help ensure high customer service levels.
Increase supply chain efficiency
An inefficient supply chain can lead to many problems, such as stockouts, slow deliveries and incorrect orders. This will undoubtedly 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.
You can improve efficiency and raise the bar regarding your productivity and service levels by automating your supply chain management processes. 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 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 who 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 won’t be affected by delays or inaccuracies and will often look to work with partners who have the technology available to help prevent such issues.
Accurate forecasting and procurement
Being able to predict product demand accurately is necessary to ensure you can provide customers with the products they want when they want them. If you underestimate demand, you risk stockouts and lost sales. Demand forecasting will help you stock the right products to fulfil customer orders with the shortest possible lead times.
ABC analysis
Inventory classification methods, such as ABC analysis, can help inventory management teams 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 that generate 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 your customers’ interest and keep them loyal.
What comes next?
High customer service levels are critical to the success of most businesses. Ensuring stock availability and order fulfilment will help drive customer service levels and encourage positive customer reviews. However, you shouldn’t just measure the customer service level KPI in isolation from other metrics; there is a host of inventory management KPIs that will help you up your game when it comes to satisfying your customers with excellent service. Download our KPI eBook below for more details:
