CUSTOMER SERVICE DEFINITIONS AND KEY MEASURES
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1 CUSTOMER SERVICE DEFINITIONS AND KEY MEASURES Version THE FRAMEWORK FOR PROCESS IMPROVEMENT Experience shows that benchmarking s potential to drive dramatic improvement lies squarely in making out-of-the-box comparisons and searching for insights not typically found within intra-industry paradigms. To enable this type of benefi cial benchmarking, the APQC Process Classifi cation Framework SM (PCF) serves as a highlevel, industry-neutral enterprise model that allows organizations to see their activities from a cross-industry process viewpoint. The PCF enables organizations to understand their inner workings from a horizontal process perspective, rather than a vertical functional viewpoint. The PCF does not list all processes within a specifi c organization, and every process listed in the framework is not present in every organization. Originally created in 1992 by APQC and a group of members, the framework has experienced more than twenty years of creative use by thousands of organizations worldwide. The PCF is supported by APQC s Open Standards Benchmarking research. It is continuously enhanced as APQC s Open Standards Benchmarking team further develops defi nitions, processes, and measures. Please visit APQC s Web site periodically for updates. The PCF is available for organizations of all industries and sizes at no charge by visiting Develop Vision and Strategy 5.0 Manage Customer Service OPERATING PROCESSES >>> 2.0 Develop and Manage Products and Services >>> 3.0 Market and Sell Products and Services >>> 4.0 Deliver Products and Services >>> MANAGEMENT AND SUPPORT SERVICES 6.0 Develop and Manage Human Capital 7.0 Manage Information Technology 8.0 Manage Financial Resources 9.0 Acquire, Construct, and Manage Assets 10.0 Manage Enterprise Risk, Compliance, and Resiliency 5.0 Manage Customer Service 11.0 Manage External Relationships HISTORY The Process Classifi cation Framework was originally envisioned as a taxonomy of business processes. The initial design involved more than 80 organizations from the United States and worldwide. Since its inception, the PCF has been updated several times to refl ect changes in the way organizations do business Develop and Manage Business Capabilities In response to feedback from users of the PCF, APQC regularly engages practitioners, consultants, and academics to develop defi nitions based on real-world experience with the processes. That collaborative effort resulted in this document: a listing of processes with defi nitions and selected key performance indicators from APQC s Open Standards Benchmarking repository. The defi nitions contained in this document are to be considered in conjunction with the PCF. The content in this document will be updated according to research performed by APQC and subsequent updates to the PCF. This document was created using PCF version Version October 2012
2 5.0 Manage Customer Service Definitions and Key Measures TABLE OF CONTENTS 5.0 Manage customer service Develop customer care/customer service strategy 3 Key Performance Indicators Develop customer service segmentation/ prioritization (e.g., tiers) Defi ne customer service policies and procedures Establish service levels for customers Measure and evaluate customer service operations 5 Key Performance Indicators Measure customer satisfaction with customer requests/inquires handling Measure customer satisfaction with customer-complaint handling and resolution Measure customer satisfaction with products and services Plan and manage customer service operations 4 Key Performance Indicators Plan and manage customer service work force Manage customer service requests/inquiries Manage customer complaints 5 RIGHTS AND PERMISSIONS 2012 APQC. ALL RIGHTS RESERVED. APQC encourages the wide distribution, discussion, and use of the PCF and PCF defi nition documents for classifying and defi ning processes. APQC grants permission for use and adaptation of the PCF for internal use. For external use, APQC grants permission for publication, distribution, and use, provided that proper copyright acknowledgment is made to APQC. No modifi cations to the look or content should be made in external venues. ABOUT APQC APQC is a member-based nonprofi t and one of the world s leading proponents of knowledge management, benchmarking, and best practices business research. Working with more than 750 organizations worldwide in all industries, APQC provides organizations with the information they need to work smarter, faster, and with confi dence. Visit or call and learn how to Make Best Practices Your Practices SM. Please use the following text when reusing the PCF in external print or electronic content. The PCF was developed by APQC and member companies as an open standard to facilitate improvement through process management and benchmarking regardless of industry, size, or geography. The PCF organizes operating and management processes into a number of enterpriselevel categories, including categories, process groups, and over 1,000 processes and associated activities. The PCF and its associated measures and benchmarking surveys are available for download and completion at no charge at 2 Permission granted to photocopy for personal use APQC. ALL RIGHTS RESERVED.
3 5.0 Manage Customer Service (10006) The use of category 5.0 processes will depend on the nature of an organization s business. At some organizations such as those in telecommunications, food service, customer contact services, or retail the core business (or a significant portion of the business) is customer service. In these cases, category 4.0 Deliver Products and Services may be more appropriate in particular, process group 4.4 Deliver service to customer. But typically, categories 4.0 and 5.0 deal with activities related to actual provision of the product or service (4.0) and activities related to customer contact before or after that provision (5.0). When thinking about the distinction between the delivery of a service and the customer service function, remember that the employee or group that delivers an initial service to a customer (such as a restaurant server or retail store cashier) is often not the same person or group that deals with customer inquiries, requests, and complaints after the fact. Those who deal with customers before and after the delivery of a service are typically working within the category 5.0 Manage Customer Service. Those delivering the service are working within 4.0 Deliver Products and Services. Note that not all key performance indicators (KPIs) listed in this document will apply to every organization. The KPIs selected by an organization depend on its structure, strategy, and critical objectives. 5.1 Develop customer care/customer service strategy (10378) Process group 5.1 Develop customer care/customer service strategy involves understanding and segmenting customers, creating policies to govern customer service, and setting service targets and priorities. Some of these determinations may be informed by segmentation and relationship building that occurred within process category 3.0 Market and Sell Products and Services. This strategy governs the way the organization provides service to customers proactively or in response to customer requests/issues. Key Performance Indicators: Ratio of forecasted: complaints to actual complaints number of customer interactions to actual customer interactions customer lifetime value to actual value (overall and by segment) service cost to actual cost (overall and by segment) customer accounts saved to actual customer accounts saved customer contacts escalated to actual customer contacts escalated Customer (overall and by segment): satisfaction loyalty churn perception of quality and service levels Develop customer service segmentation/prioritization (e.g., tiers) (10381) During the Develop customer service segmentation/prioritization process, an organization analyzes its existing customers and any feedback it has received. Based on research and customer characteristics and needs, the organization develops an appropriate customer segmentation plan and links customers with the appropriate segment. The organization also prioritizes customers and the types of issues that should be escalated in priority. Version October
4 ( 5.1 Develop customer care/customer service strategy continued ) Defi ne customer service policies and procedures (10382) The Define customer service policies and procedures process encompasses all the steps required to develop a set of policies and procedures for dealing with customer inquiries, requests, issues, and outreach. These policies govern the actions of employees who provide customer service, and the particulars depend on the kinds of customer service offered by the organization and the importance of customer service to the profitability of the business Establish service levels for customers (10383) In the Establish service levels for customers process, the organization determines the degree of service it will provide, which sometimes differs according to customer segment or type of issue. These targets may be referenced on organizational or individual employee scorecards and are typically communicated to employees during the on-boarding process. Service levels may be linked to the policies constructed in process Define customer service policies and procedures. 5.2 Plan and manage customer service operations (10379) Process group 5.2 Plan and manage customer service operations involves the development of plans and management standards for the customer service work force and the actual processing and management of customer service requests, inquiries, and complaints. The way these processes are performed depends heavily on the strategy, policies, and service levels established in process group 5.1 Develop customer care/customer service strategy. Supporting technology is typically required to plan and manage customer service. The development and maintenance of customer service technology is typically categorized in processes Perform enterprise data and content management, Create IT services and solutions, and Maintain IT services and solutions. Key Performance Indicators: Percentage of: overdue service requests adherence to service guidelines accurate responses service requests exceeding service level service requests reworked Speed of resolution Cost of customer service per full-time employee (FTE) Number of FTEs per customer interaction Total cost to perform Manage customer service requests/ inquiries and Manage customer complaints per: process FTE $1,000 revenue Agent schedule adherence Average: call handling time (in seconds) seat utilization speed of answer (in seconds) for agent queue calls Response time for inbound requests coming from , fax, and/or postal mail 4 Permission granted to photocopy for personal use APQC. ALL RIGHTS RESERVED.
5 ( 5.2 Plan and manage customer service operations continued ) Plan and manage customer service work force (10387) The Plan and manage customer service work force process concentrates on activities related to managing customer service personnel, over and above the activities that reside within process category 6.0 Develop and Manage Human Capital. Customer service employee planning requires the organization to forecast the volume of contact the customer service function is likely to receive within the quarter (and/or other time periods as necessitated by the business). Based on that forecast and knowledge of typical customer contact cycle times and desired service levels, the organization can determine how many employees are required and how they should be scheduled. The scheduling of the work force is based on many factors, including historical service trends and anticipated high-volume time periods. During this process, the work force s time and utilization is also tracked to enable accurate forecasting in future years. The quality of customer interactions is also monitored and measured in this process. The criteria for evaluating customer interactions depends on the nature of the business and the service levels established in process Establish service levels for customers Manage customer service requests/inquiries (10388) The Manage customer service requests/inquiries process deals with the actual receipt, routing, and response to customer requests/inquiries. This process depends on the planning that occurred in process group 5.1 and process Customer service representatives accomplish these activities, and their performance is measured in process group 5.3 Measure and evaluate customer service operations Manage customer complaints (10389) The Manage customer complaints process deals with every aspect of customer complaints, from initial receipt and routing to resolution and response. This process depends on the planning that occurred in process group 5.1 and process Customer service representatives accomplish these activities, and their performance is measured in process group 5.3 Measure and evaluate customer service operations. Complaints are handled slightly differently from requests and inquiries, and thus, an activity ( ) is present in process that does not exist in process Manage customer service requests/inquiries. Activity Resolve customer complaints typically occurs internally, when the organization convenes to find an appropriate resolution to the complaint or when an employee executes an action to resolve the complaint (e.g., fixing a broken link on a website or correcting a line item on a receipt or invoice). Once the issue has been resolved or a plan for resolution has been formulated, the organization can move forward to activity Respond to customer complaints. During activity , customer service representatives may tell the customer that the issue has been resolved or may discuss the potential solutions with the customer to identify next steps. Version October
6 5.3 Measure and evaluate customer service operations (10380) Process group 5.3 Measure and evaluate customer service operations focuses on measuring customers satisfaction with various aspects of the service they receive. The factors that the organization combines to rate customer satisfaction may be determined within process Create enterprise measurement systems model or in process Establish service levels for customers. What constitutes customer satisfaction will vary from organization to organization, and the methods used to collect customer feedback will also differ. Many organizations ask their customers if they will continue to come to the organization in the future; if they would recommend it to a friend; or if they will rank how well the organization responds to requests, how quickly the organization responds, or how well the organization seems to understand customer needs. Supporting technology is typically required for the advanced measurement and knowledge capture that may be involved in these processes. The development and maintenance of customer service technology is typically categorized in processes Perform enterprise data and content management, Create IT services and solutions, and Maintain IT services and solutions. Key Performance Indicators: Customer satisfaction, loyalty, and/or churn Percentage of adherence to internal service quality standards Number of: escalations complaints compliments product/service changes resulting from feedback First contact resolution rate Cost per customer interaction (call, , in person) Speed of response Measure customer satisfaction with customer requests/inquiries handling (10401) In the Measure customer satisfaction with customer requests/inquiries handling process, the organization gathers information from customers about their experience dealing with customer service, whether through an inquiry, a sales transaction, or other interaction with customer service representatives. (Note that the measurement of complaint handling occurs in process 5.3.2, and customer satisfaction with the products and services themselves is measured in process ) This information may be collected in person, through surveys, through customer interviews, in online forms, from other areas of the business, or through other methods. This process includes both the solicitation and analysis of feedback along with the reporting of any feedback and conclusions to management. Feedback may be analyzed quantitatively or qualitatively, depending on the nature of the customer responses and the needs of the organization. Likewise, the reporting methods should match the standards of the organization, whether through spreadsheets, meetings, or online tools. The extent, duration, and frequency of evaluation will also depend on the organization and its business. 6 Permission granted to photocopy for personal use APQC. ALL RIGHTS RESERVED.
7 ( 5.3 Measure and evaluate customer service operations continued ) Measure customer satisfaction with customer-complaint handling and resolution (10402) In the Measure customer satisfaction with customer-complaint handling and resolution process, the organization gathers information from customers about how their complaints were handled by customer service representatives. (Note that the measurement of non-complaint inquiries occurs in process 5.3.1, and customer satisfaction with the products and services themselves is measured in process ) This information may be collected in person, through surveys, through customer interviews, in online forms, from other areas of the business, through the complaint resolution process (5.2.3), or through other methods. This process includes both the solicitation and analysis of feedback along with the reporting of feedback and conclusions to management. Activity Analyze customer complaint data and identify improvement opportunities includes the analysis of the data and any work completed internally to make improvements. The analysis of the complaint often results in actions within other process categories for example, improving the customer experience with billing (category 8.0) or by altering the nature of the products/services themselves (2.0 or 4.0). Feedback may be analyzed quantitatively or qualitatively, depending on the nature of the customer responses and the needs of the organization. The customer satisfaction data for complaints is typically gathered at the time of the complaint but may be aggregated with data gathered in process Measure customer satisfaction with customer requests/inquiries handling Measure customer satisfaction with products and services (10403) In the Measure customer satisfaction with products and services process, the organization gathers information from customers about their experience with the products and services themselves. (Note that the measurement of customer inquiry handling occurs in process and the measurement of complaint handling occurs in process ) Organizations may chose to track these activities during this process (5.3.3) or through activities Solicit customer feedback on services delivered and Process customer feedback on services delivered. This decision usually depends on the strategic use of an organization s customer service. No matter when this information is tracked, it may be collected in person, through surveys, through customer interviews, in online forms, from other areas of the business, or through other methods. This process includes both the solicitation and analysis of feedback along with the reporting of feedback and conclusions to management and other areas of the business as necessary. Feedback received here can inform activities Identify potential improvements to existing products and services, Identify potential new products and services, and Conduct customer and market research. Customer satisfaction data may be analyzed quantitatively or qualitatively, depending on the nature of the customer responses and the needs of the organization. Likewise, the reporting methods should match the standards of the organization, whether through spreadsheets, meetings, or online tools. The extent, duration, and frequency of the evaluation will also depend on the organization and its business. The communication of customer satisfaction data throughout the business may be essential to the growth of the business and its overall understanding of customer needs. 123 North Post Oak Lane, Third Floor Houston, Texas phone fax pcf_feedback@apqc.org Version October
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