Learn how to build a customer service Balanced Scorecard step-by-step. Start with a general business model, analyze the main business challenges, and convert them into a strategy map with KPIs.
Customer support should be fast, good, and inexpensive – a classical project management triangle, where one can pick any two options. With a right approach to the strategies and KPIs, an organization can balance on these three options, and have excellent customer service at a reasonable price.
Customer Service Balanced Scorecard vs. KPI Scorecard
In this example we create a Balanced/Strategy scorecard. As its name implies, this addresses the challenge of strategy execution. If you plan to use it for the customer service in your company, make sure that it is aligned with the overall strategy of your organization.
If your goal is to be more specific and address the operation issues of customer service, then you will find some examples of indicators for a KPI scorecard in the final section of this article.
Draw a customer service model
As we do recommend in our KPI system: have a look at the business process, find its inputs/outputs, activities/results, and bottlenecks. If you decide to build a Balanced Scorecard for your customer service, then I’d recommend starting with a model of how it is working now.
Here is how it might work:
- A customer or a prospect client has a question about your product or service.
- A customer goes to the website and searches for the solution in the knowledge base, or
- A customer is contacting your company via a contact form, social networks, or phone call. First-line customer support specialist is trying to answer the question. If the problem is a tough one, then the issue is transferred to the second-line agent.
- A company is learning: the product is improved; the knowledge base is updated if needed.
What might be the possible goals/response plan for this model?
- Addressing Step 1: Make the product more user-friendly so that the customer would have not faced this problem, and respectively would have not contacted you, at least not with this issue;
- Addressing Step 2: Making the knowledge base easier to use so that customers could solve more problems themselves.
- Addressing Step 3: Train your first-line agents so that more of the difficult problems could be solved without transferring them to the 2nd line specialists.
- Addressing Step 4: Make sure that there are no informational silos between customer service and other business units.
Let’s put these goals on the strategy map to reflect the cause-and-effect relationship between them. We can also add more details, and align them with the goals’ proper metrics.
We need to review the model described above once again and locate the points where the main costs are produced.
- Maintaining a knowledge base
- 1st line agent’s costs
- 2nd line agent’s costs
Goal: Reduce costs for the customer service
The highest costs are related to the agents. We can start with:
- Leading indicator: First-line resolution rate
- Lagging indicator: Cost per inbound contact
In this context “First-line resolution rate” is a leading indicator, but the same metrics can be a lagging one for a goal like “Improve agent training.”
In the Customer perspective we need to map what customers want a client service to be like. A typical mistake is to map here the behavior that the organization wants to see from its customers.
Another important nuance is that besides external customers of the organization, there also are internal ones! Your employees and your partners will also need to get in touch with your customer service. You might want to have specific goals and indicators for the internal customers as well.
Goal: Make knowledge base easy to use and up to date
What can be a possible improvement initiative for this goal? Many organizations have their knowledge base available for the public online, but not all of them invest in keeping those knowledge bases up to date. The action plan for this goal might be as simple as “Find and remove 404 pages,” or as detailed as “Do a behavior analysis of the website visitors and suggest better ways to organize and present data online.” For this example, I’m using an umbrella initiative: “Maintain knowledge base up-to-date.”
Here are the indicators that I suggest starting with:
- Leading indicator: % of the up-to-date materials in the knowledge base.
- Lagging indicator: “self-service completion rate” or its spin indicator “% of the “typical” questions askedof the customer service specialists.”
The lagging indicator in this case is very subjective. You might have an excellent knowledge base, but your clients will still prefer to ask “typical” questions in person. Nothing bad about this; to qualify the value it makes sense to compare it with the historical data.
Measurable by design
How can you find out the value of “% of the materials that are up-to-date”? I’d suggest following here a “measurable by design” principle like we discussed in the KPI system. Instead of trying to measure something afterwards, be proactive and incorporate the measurement into your business processes. For example, when some feature of the product are, getting updated, make sure that the respective section of the knowledge base is marked as “Update is needed.”
Goal: Quick and effective conversation between a client and the company
In simple words, this goal means that a customer is asking a question and gets a detailed answer within a reasonable time. A typical action plan in this case is to train your customer service team.
- Leading indicator: First contact resolution rate
- Leading indicator: Average speed of answer (for each media)
- Lagging indicator: Satisfaction by the customer service
Net Promoter Score indicator
What about another popular indicator: Net Promoter Score? I saw some customer service scorecards where this indicator is used together with “Satisfaction by the customer service,” but the problem is that NPS is strongly influenced by the company’s product/service, so it might be hard to distinguish the specific contribution of the customer service. The same might be said about “Satisfaction by the customer service,” but the degree of influence is less than in the case of NPS.
As you can see on the strategy map, the goals from the “Customer” perspective are linked by cause-and-effect connections with the goal in the Financial perspective. Active usage of the knowledge base and effective answers to the client’s questions will lead to lower costs for the company.
One might argue that this model pushes customer service specialists towards giving fast, but less useful answers. That’s not true. First, we have “Customer satisfaction” indicator to make sure that we are leading customer service in the right way; second, there is an implied goal in the “Finance” perspective – “Increase organization’s profits,” so whatever we do, it should help a company to earn more in long term, not just to cut short-term costs.
Internal business processes perspective
Let’s have a look at the costs structure again. One of the biggest costs that we want to address are agent costs, which actually consists of:
- Hiring costs
- New agent training costs
- Regular training costs
- Managing costs
- Agent’s salary, bonuses, etc.
In other words, the company invests a lot in preparing new agents, and it is important to keep the turnover rate of high performers low. A business goal in this case might be formulated as:
Goal: Maintain Excellent Conditions for Agents
What might be an organization’s initiatives to achieve this objective? A common sense approach is to give your agents excellent training/coaching, necessary tools, and make sure that the work load is appropriate:
- Leading indicator: Agent training hours
- Leading indicator: Agent occupancy
- Lagging indicator: Agent satisfaction
- Lagging indicator: Turnover rate among top performers
You can go more into the details by adding more sub-goals and indicators related to the training efficiency and effectiveness.
With “Agent occupancy” we have an interesting case:
- On the one hand high “Agent occupancy” will lead to lower costs,
- On the other hand, high “Agent occupancy” means high work load and as a result a high turnover rate.
Where is the golden mean? Do controlled experiments to answer this question! Here are the hypotheses that you might use:
- Hypothesis 1: “Happy agents produce better results.” Keep agent occupation low and make sure that an agent has enough time to answer a client’s questions in detail.”
- Hypothesis 2: “High agent load doesn’t affect their results that much.”
- Hypothesis 3: “Improve knowledge base and train agents better to decrease their workload naturally.”
Your metrics will help to qualify the results obtained. According to some reports you can expect a dramatic growth of “Turnover rate” when “Agent occupancy” hits 70%.
Learning and growth perspective
A question for this perspective is: where should an organization focus their learning efforts in order to serve clients better and achieve goals from the financial perspective.
Here you might add the goals related to understanding clients’ needs better; the goals that will help to improve agent training and coaching programs; and improve the way the customer service team is communicating with other business units.
Goal: Learn from mistakes
If the problem was reported by a customer, was it reported to the developers? If there is some typical issue that customers struggle with, was a knowledge base revised?
Goal: Keep knowledge aligned with new customer behavior habits.
Is the knowledge base mobile-friendly? Do we have a version for print, an online version? Do we have guides in a video format?
Goal: Provide agents with better training and coaching programs
Do we provide enough tools and technical knowledge to the agents? Do we help them to improve their communication skills?
Goal: Break informational silos
What needs to be improved in the communication between customer service, IT, Developers, Marketing and Sales? Find and eliminate possible informational silos.
Indicators for a KPI Scorecard
The approach that we have discussed is appropriate for the definition and execution of a customer service strategy. What about more specific operational metrics? Here are some suggestions:
- Average Answer Time
- Average Resolution Time
- Tickets backlog
- First-call resolution
- Abandonment Rate
- Calls handled
- % of calls transferred
- First-line resolution rate
- Satisfaction by the customer service
- % of customers given satisfaction surveys
- Number of complaints
- Self-service completion rate
- Knowledge base completeness, %
- Cost per inbound contact
- Agent costs (hire, training, managing)
- Agent training hours
- Agent occupancy
- Average number of requests per agent
- Agent satisfaction
- Turnover rate among top performers agents
The list goes ahead. My recommendation is that there is no need to track all these metrics, the best approach is to understand the current business goals, and find metrics that will help to track progress towards these goals.
I guess many of the readers would like to create a similar scorecard for their own organization or business unit. Here is a 1-hour long video where I go through the stages once again and explain my steps:
Strategy Map Wizard – Balanced Scorecard in 6 Minutes
Answer simple questions - build a professional strategy map in 6 minutes.Strategy formulation and description might be a time-consuming project even for an experienced strategist. This Strategy Scorecard Wizard will make the whole process fast and intuitive. Learn more!
A final word. Think about behavior induced.
I heard a story about a Scandinavian company that wanted to improve their call center. They implemented a number of KPIs and one of them was “Time to handle a call.” They pushed too hard, and soon they found out that the agents started calling each other to game this metric. This indicator was always in the green zone…
The main recommendation in this context is to think about the behavior that your new indicators will induce and if your current measurement culture can support these changes.
Do you have any thoughts? What are your favorite metrics for customer service? Feel free to share.