Customer service performance is a key business objective that boils down to making customers happy. But what makes customers happy? In this article, we will present you the analysis we conducted to see which factors influence customer service performance. At the end, you will find a full list of customer service performance metrics.
Literature shows that when employees (and businesses) deliver high-quality service, their customers are:
- More likely to give higher ratings
- Report higher satisfaction
- Visit a store more often
- And buy more products!1
Simply put, a business makes more profit when its customers are happy. So how do we make customers happy?
We can answer this question by looking at the literature. It shows that customer service performance is influenced by a number of factors. These factors can be categorized into individual and organization-level factors.
Individual factors that influence customer service performance
Let’s first look at the factors that help an individual employee provide better customer service.
Research indicates that restaurant goers who pay more for their food, perceive it as being tastier. This proofs that perception is everything.
The fact that people rate the same food differently based on its price means that the customer experience is often more important than the product itself.
Customer experience is formed by the unique interaction between customer and employee. Employees try to accommodate a customer’s every wish because they know that when a customer feels like a king, he’ll spend more money.
According to literature, the employee’s personality is an important factor in providing a better customer experience.
Personality traits like conscientiousness and extraversion impact customer service performance. Conscientiousness individuals are organized, dependable, responsible and hardworking. They’ll usually do what is expected of them.
Extraverted people are sociable, talkative and active. These individuals usually show high-energy when they interact with others (customers).
Organizational factors that influence customer service performance
There are also factors on an organizational level that influence how customers feel about the service level, as demonstrated by Ployhart, Iddekinge & Mackenzie (2011).
The easiest way for a company to improve customer service performance is by providing a “climate for service”.
A climate for service is an organizational climate in which good service performance is valued, facilitated, and rewarded. Employees are able to thrive in this climate and thus provide better service.
Research by Ployhart et al. (2011) showed that stores with higher service climate had higher customer service performance. In this case, service climate was measured by asking employees to rate their restaurant’s service climate (check below for more information).
The second factor was perceived autonomy. The degree to which an employee can influence decisions at work was related to higher customer service performance.
This could be caused by multiple factors. Employees with more autonomy are more likely to feel responsible and thus be more assertive. In addition, autonomy could lead to more decision latitude, which helps these employees to solve problems faster.
Interestingly, in this same study (which focused on restaurants) service training was not associated with higher service level.
The fact that an employee attends training does not necessarily mean they will learn or apply new skills to the job.
It could also be that employees don’t benefit as much from training for a relatively easy service offering (like serving food in a restaurant) compared to a more complicated and time-intensive service offering like software sales.
Performance incentives were also not related to superior service.
So, why is customer service performance so important?
Customer service performance in a store was related to how happy customers where and how often they would return. In other words: higher customer service performance meant higher customer satisfaction and customer loyalty (Ployhart et al., 2011).
The customer’s age and sex are both related to how they rate an employee’s service level. Older customers are milder and give higher ratings. In addition, females are more satisfied with service and are more likely to come back and recommend the restaurant to others (higher satisfaction and loyalty).
Customer service performance metrics
In order to evaluate superior customer service, we made a list of the relevant customer service performance metrics mentioned in this article. The following ten metrics can act as indicators of customer satisfaction.
Extraversion is a big-5 personality trait. Extraverted people are sociable, assertive, talkative and active. Extraverts also have a higher desire to excel. Research has shown that extraverts perform better in jobs. Extraverted individuals have higher (individual) customer service performance compared to introverts.
Conscientiousness is the second big-5 personality trait associated with superior customer service performance. Conscientious people are dependable, responsible, work hard and strive for achievements. Besides being related to superior customer service, conscientiousness is also related to superior job performance in general.
The three other big-5 personality traits (openness, agreeableness, and neuroticism) were not associated with superior customer service performance.
- Cognitive abilities
Another indicator of better customer satisfaction is an employee’s cognitive ability. Employees with a higher cognitive ability (often measured in IQ) tend to provide better customer service (Ployhart et al., 2011).
People with greater cognitive abilities will learn faster, absorb more information and generalize knowledge more effectively. Cognitive ability is, therefore, our third customer service performance metric. Moreover, a proxy for this metric could be the employee education level.
- Employee training
Training increases the speed at which employees learn specific knowledge (Hatch & Dyer, 2004). Training is aimed to improve the employee’s skills. More skilled employees tend to provide better service (Ployhart et al., 2011). However, this does not hold true for all jobs. Employees with less complex service jobs (like waiting tables) seem to benefit less from training compared to employees with more complicated service jobs.
- On the job experience
On the job experience is another customer service performance metric, as more experienced employees are better equipped for their job and thus provide better service (Ployhart et al., 2011). For example, a rookie mistake, such as a waiter who fails to balance his/her tray and spills a drink on a customer, can lower the customer service experience and produce less satisfied customers.
- Store service climate
The organization’s climate is an important factor which impacts employee behavior. When an organization has a climate for service, employees know that superior customer service is desired, rewarded and expected. Such a climate helps employees provide better service.
Store service climate has been proven to impact service quality and customer satisfaction. It can be easily measured by asking employees to rate the climate using a short scale. An example item for this scale is: “The restaurant measure and track the quality of work and service?”.
- Local competition
Local competition influences how customers rate a store’s customer service performance.
Local competition can be defined as the number of restaurants within a certain distance. When local competition is higher, customer satisfaction and ratings on service quality where higher, and customers came back more often.
An explanation for this is that when local competition is fierce, establishments push their service level higher to compete effectively.
- Individual customer service performance
Individual customer service performance is a metric that indicates the level of service performance of an employee. A common way to measure this is by asking “how likely are you to recommend [person]’s service to a friend or colleague?”, or by measuring it through a 360-degree feedback form, in which the client is asked to rate the employee’s service level.
Individual customer service performance is an outcome variable that is influenced by the previously mentioned variables 1 – 7.
- Team-level customer service performance
Team or store-level customer service performance is a metric influenced by individual customer service performance. A study by Liao & Chang (2014) found that when individual customer service performance (8) was above average, that specific store outperformed the other stores in the sample.
In other words: there is a bottom-up effect of individual customer service performance to team-level customer service performance.
- Customer satisfaction
Customer satisfaction is one of the most important customer service performance metrics. All previous metrics are antecedents of higher customer satisfaction. Customer satisfaction can be measured in different ways. An increasingly common way to do this is by rating the service with a smiley face or thumbs up/down via a computer.
- Customer loyalty
Customer loyalty represents the likelihood that a customer will return, and will recommend the establishment to others. Customer loyalty lies close to a more financial outcome: Returning customers spend more than customers who only visit once.
Customer loyalty can easily be measured by keeping a record of customer purchases in a (reservation) system. An additional benefit of these systems is that they can help to provide a better customer service experience. For example, most sun studios record a customer’s previous tanning intensity and session duration to provide better tanning advice based on their history. An alternative could be a (scannable) customer loyalty card.
In other words, these 11 customer service metrics influence how your customers perceive your service. You can influence most of these factors through data-driven recruitment, better selection, and smart business policies. Best of luck!
To learn about how to improve business results through smarter, data-driven HR decisions, visit the HR Analtics Academy!
1. Borucki & Burke, 1999; Bowen, Siehl, & Schneider, 1989↩