Measuring Customer Service Productivity

Measuring productivity in the customer service sector can be a little tricky. Unlike the manufacturing sector, in which employee productivity can be measured by the number of items produced, in the service industry you need to know how the service was delivered, as well as the degree to which the service impacted the customer experience.

Of course, you want to push your team to answer as many customer queries as possible but encouraging speed over good customer service should never be the aim. It’s no good having a quick response time if your responses are rude/condescending or not actually resolving customer queries successfully.

In its simplest form, labour productivity is the amount of output per worker. For example, the number of bottles (output) produced during a 12-hour shift (input) in a manufacturing plant. Quality obviously still play a critical part in Manufacturing however it can be incorporated directly into a productivity metric via the manufactures successful output. In contrast, services are not things, they are processes and therefore should be viewed differently. Services are intangible, heterogeneous, inseparable, and perishable. For the Service industry the “input” is a process followed and the “output” is the customer experience produced. This therefore is a little harder to measure and is subject to much more variation – after all we are human, and our individual needs often differ widely.

Service productivity is a function of efficiency, effectiveness, and demand but as mentioned previously the focus must be on customer satisfaction and quality. In other words, service productivity can be broken down into 3 components:

1.    Internal Efficiency – how effectively input resources are transformed to outputs in the form of services.

2.    External Efficiency – how well the quality of the service process and its outcome is perceived by customers.

3.    Capacity Efficiency – how effectively the capacity of the service process is utilized.

In order to measure productivity effectively it is absolutely vital to always measure all three components together (Internal Efficiency, External Efficiency and Capacity Efficiency) in order to get a more “balanced” view of performance.

How does this compare with other sectors and verticals?

Manufacturing – In its simplest form the most typically measured KPI in Manufacturing is “Piece per hour”. However, whilst it is important to measure productivity of an assembly line – total throughput for the final assembled product is far more telling and links directly to total cost. For example, if a factory has 4 assembly stations to make one product, lines A-C are producing record productivity but due to technical problems line D is producing virtually nothing then lines A-C will continue to build “inventory” (unless their output is also reduced) and total throughput for the final assembled product will also only be as good as the weakest individual line productivity.

Distribution – the primary focus of a distribution company is not to sell an item and is instead focussed on tasks completed. So, something as simple as

cases delivered per hour can often suffice. To balance with Quality including metrics such on-time arrivals and goods delivered without damage is important.

Transportation: Two metric often used the number of vehicles per km produced and the number of passenger’s kilometres produced. The first measure is linked to technical efficiency the second measure is linked to commercial efficiency after all you can’t say a company is efficient if it operates empty trains or bus. Balancing productivity with quality is also important and an effective measure to include might be the number of on-time arrivals or the length of time gone without a safety violation or accident.

Healthcare – very much like the service industry measuring something like number of patients seen by a nurse in the course of a workday would not be an effective measurement without also understanding how many of the patients received proper care and attention. As result many hospitals stick to measures that indicate how cost effective, they are being, such as overtime usage, rather than measuring throughput of patient care.

Travel & Hospitality – It is not uncommon to see revenue per employee or revenue per service provided used in the Travel and Hospitality sector, with the intent often to drive “upsells”.  For example, in a restaurant a waiter measured on revenue per “cover” for each customer would be an indication of one waiter/server’s ability to increase the revenue of each table.

Retail – Sales per labour hour is still the most common metric used. However whilst this makes sense at an organisational level when measuring at individual job role level it might make more sense to measure the number of items scanned per hour for a cashier, or number of items stacked on the shelf per hour for a shelf stacker.