13 KPIs to Measure and Improve Service Quality
This year businesses could lose $3.7 trillion in sales due to poor customer service. That’s not a typo—three point seven trillion dollars is at risk because companies fail to understand what their customers truly want.
Imagine a single interaction that determines whether a customer becomes a lifelong advocate or walks away forever. A mishandled support call, an unanswered email, a moment of indifference—these aren’t just service failures. They’re strategic landmines that can decimate your brand’s reputation and bottom line.
Yet, most businesses are navigating customer service blindfolded. They react instead of strategize, guess instead of measure, and bleed customers without understanding why. What if you could predict customer satisfaction, prevent churn, and create experiences that don’t just meet expectations—but exceed them?
In this blog we’ll explore 13 KPIs you can use to measure, track, and improve your service quality. But first, let’s start with the basics.
What Is Service Quality?
At its core, service quality is a promise. It’s your commitment to meet—and ideally exceed—customer expectations through every single interaction. This isn’t about perfection. It’s about consistent, reliable, and genuinely human experiences that transform transactions into relationships.
Consider the last time you felt truly valued as a customer. What made that experience memorable? Chances are, it wasn’t just about solving a problem—it was about how that problem was solved. The empathy. The efficiency. The feeling that someone genuinely cared.
What are Service KPIs?
Service KPIs, aka key performance indicators, are metrics that track the effectiveness of your customer service operations. Think of service KPIs as diagnostic tools that reveal the health of your customer experience—showing you exactly where you’re winning and where you’re vulnerable.
Tracking service KPIs is like having a real-time map that illuminates how your team is performing. Response times, resolution rates, satisfaction scores—these aren’t just numbers. They’re strategic insights that can transform how you understand and serve your customers.
The Five Dimensions of Service Quality
The SERVQUAL model deconstructs service quality into five key dimensions —reliability, assurance, tangibles, empathy, and responsiveness. The five dimensions offer a framework to assess how well your business delivers on customer expectations.
- Reliability reflects the consistency and dependability of a service, ensuring promises are kept and errors are minimized.
- Tangibles are the physical aspects of your brand that shape the first impression, from your website design, to your facilities and teams’ appearance.
- Empathy involves understanding and addressing the unique needs of each customer, creating a personalized and caring experience.
- Responsiveness is the willingness and speed of addressing customer concerns or requests, demonstrating a commitment to their satisfaction.
Together, these dimensions form the foundation for exceptional customer experiences. Keep them in mind as we explore specific KPIs – they’ll help you see the bigger picture of service quality.
Top Benefits of Measuring Service Quality
Tracking service quality isn’t just ticking boxes – there are a treasure trove of benefits for your business:
Improved Efficiency: Service quality metrics show where businesses can improve. Streamlining processes saves time and cuts costs.
Early Problem Detection: Tracking service quality helps businesses find issues early. Fixing problems before they grow keeps customers happy.
Better Alignment with Customer Needs: Measuring service quality helps businesses keep up with customer expectations. This ensures services remain responsive and relevant.
Smarter Decisions: Historical service quality data helps leaders make better decisions. It shows where to invest and what needs fixing.
Core Service Quality KPIs + Why They Matter
1. Call Volume
What it Measures: Total call volume measures the number of incoming calls handled within a specific period. This KPI highlights demand trends, helping businesses allocate resources effectively and manage workloads.
Why it Matters: Monitoring TCV ensures that your team is neither overwhelmed nor underutilized, leading to optimized staffing and better customer experiences.
2. Service Level Adherence (SLA)
What it Measures: Service level adherence tracks the percentage of calls answered within a predefined time frame. It measures how well your service aligns with customer expectations and contractual obligations.
Why it Matters: Failing to meet SLAs can result in dissatisfied customers and penalties, making this KPI crucial for maintaining service agreements and trust.
The Formula: Service Level (%) = (Calls Answered in X seconds or less / Total Inbound Calls) x 100
3. Average Speed to Answer (ASA)
What it Measures: Average speed to answer measures how quickly calls are answered by a representative. Calculated as the total waiting time divided by the number of answered calls, this KPI indicates responsiveness.
Why it Matters: Faster ASA improves customer satisfaction, as long waits often lead to frustration and a higher likelihood of call abandonment.
The Formula: ASA = Total wait time of all answered calls / Total number of answered calls
4. Average Handle Time (AHT)
What it Measures: Average handle time measures the total time spent on a call, including hold time and after-call work. It reflects efficiency in resolving customer issues.
Why it Matters: Balancing a low AHT with effective problem resolution is critical to maintaining both operational efficiency and customer satisfaction.
The Formula: AHT = (Total Talk Time + Total Hold Time + Total After Call Work Time) / Total Calls Handled
5. Abandon Rate
What it Measures: Abandon rate is the percentage of callers who hang up before being connected to a live agent. High abandonment rates indicate dissatisfaction with wait times or service availability.
Why it Matters: Reducing this metric is essential to prevent losing customers and revenue due to poor experiences.
The Formula: Abandon Rate = (Number of Abandoned Calls ÷ Total Number of Call Attempts) x 100
6. CSAT and NPS
What it Measures: Customer Satisfaction (CSAT) and Net Promoter Score (NPS) measure customer sentiment and loyalty, respectively. CSAT gauges immediate satisfaction with a service interaction, while NPS reflects the likelihood of customers recommending your business.
Why it Matters: Together, they provide a clear picture of customer experience and long-term loyalty, guiding improvement efforts.
NPS Formula: NPS = (Number of Promoters ÷ Total Number of Customers in the Sample) − (Number of Detractors ÷ Total Number of Customers in the Sample)
CSAT Formula: CSAT = (Number of Satisfied Customers / Total Number of Survey Respondents)
7. Adherence to Schedule
What it Measures: Adherence to schedule tracks how closely employees follow their assigned schedules. It ensures that staffing levels align with predicted call volumes, minimizing idle time and preventing overburdened agents.
Why it Matters: Maintaining this KPI supports both efficiency and employee well-being.
The formula: Schedule adherence = total minutes worked/total minutes scheduled x 100
8. Transfer Rate
What it Measures: Transfer rate measures the percentage of calls transferred between agents or departments. High transfer rates suggest gaps in agent training or unclear routing protocols.
Why it Matters: Reducing this KPI improves first-contact resolution and prevents customer frustration caused by being passed around.
The Formula: Transfer rate = (Total number of transferred calls / Total number of calls handled) x 100
9. Error Rate
What it Measures: Error rate tracks the frequency of mistakes made during service delivery. This includes miscommunication, data entry errors, or incorrect solutions provided to customers.
Why it Matters: A low error rate is vital for building trust and ensuring consistent, high-quality service.
The Formula: Error Rate = (Number of tickets with errors / Total number of tickets) x 100
10. Average Wait Time
What it Measures: Average wait time measures how long customers wait in a queue before reaching an agent. Reducing wait times requires efficient resource allocation and monitoring call flow patterns.
Why it Matters: This KPI directly impacts customer satisfaction, as excessive waits are a leading cause of complaints.
The Formula: AWT = Total Wait Time / Number of Customers Served
11. Churn Rate
What it Measures: Churn rate measures the percentage of customers who stop using your service within a given period. High churn rates indicate dissatisfaction or a failure to meet expectations.
Why it Matters: By addressing root causes of churn, businesses can retain more customers and boost long-term profitability.
The Formula: Churn Rate = (Lost Customers ÷ Total Customers at the Start of Time Period) x 100
12. Customer Retention Rate
What it Measures: Customer retention rate measures the percentage of customers who continue to engage with your business over time. High retention rates reflect successful service and customer satisfaction.
Why it Matters: Retaining customers is more cost-effective than acquiring new ones, making this KPI a cornerstone of growth strategies.
The Formula: Customer Retention Rate = (Customers at the End of the Period) – (New Customers Acquired) / Customers at the Start of the Period
13. Employee Satisfaction + Engagement
What it Measures: Employee satisfaction and engagement reflect how motivated and content employees are in their roles. Happy employees are more likely to provide excellent service, directly impacting customer satisfaction.
Why it matters: Monitoring and improving these KPIs fosters a positive work environment, reduces turnover, and enhances overall service quality.
Tools You Can Use To Measure Service Quality
Customer Surveys
Direct feedback is gold. When crafting surveys use rating scales, multiple-choice questions, or open-ended fields to measure how customers feel about different areas of your service. Then identify what needs to be improved.
Employee Surveys
Your team members are on the front lines of service every day. Their honest feedback can reveal hidden insights about internal processes and service challenges.
Call Recordings
Dive into customer call recordings with a predefined scorecard to objectively assess communication, problem-solving, and service quality. These playbacks offer a powerful way to coach your team and refine your approach.
Real-Time Monitoring with QA Software
QA software gives you a live pulse on service performance. It tracks response times, resolution rates, and service level trends, as they happen. Real-time monitoring means you can act fast to fix problems before they bog down service.
Aligning KPIs with Business Goals
At the end of the day service quality is about creating a systematic way to understand and improve how we take care of our customers.
Think of your customer journey like a road trip. At the beginning, you’re tracking how quickly you get on the road – those initial response speeds and wait times matter. As you continue the journey, you’re looking at how happy your passengers are and whether they’d want to take another trip with you again.
Breaking down departmental barriers is key. When you combine operational KPIs with sales data, you gain a better understanding of how service quality directly influences business outcomes like conversion rates and customer loyalty.
Benchmarking gives you a clear marker of what “good” looks like in your industry. They provide context by comparing your performance against industry standards and your own historical data. For instance, a medical clinic might consider a 3-minute average handle time optimal, while a financial services firm could require 8 minutes to deliver comprehensive support.
Improving service quality isn’t about hitting an arbitrary number, but about understanding where you are and charting a path to where you want to be.
What matters most is developing benchmarks that:
- Reflect your specific business model
- Address your customers’ unique expectations
- Align with your strategic objectives
Your KPIs tell a strategic narrative of how you deliver value, one interaction at a time. Your service quality benchmarks should evolve with your business, always keeping the customer experience front and center.
Back to Newsletters
