What is the Customer Service Level? – 5 customer service standards

Customers are essential to all businesses. Therefore, it is crucial to satisfy the customer by giving the best service to him.

This post tells all about customer service, customer service standards, and parameters to be maintained. Read on to find out.

Customer Service Level

What is the Customer Service Level?

Customer service level is the percentage of occasions the order is delivered as promised.

It is a set of rules and strategies put forth to evaluate the performance of a system. We can determine the customers’ satisfaction it deals with and how much more of an effort it needs to make.

The more customers a company satisfies or deals with successfully, the more it raises the ladder. The ladder here is market recognition and value. The relationship between the customer and the firm is significant.

If people don’t buy the company’s idea, it will never make it to the top. Customers must believe in them and have faith in the finished and marketed products.

That is where the importance of customer service standards plays its part.

It depends on how efficiently the customer demands are met before stock out of the on-hand inventory and how soon it is re-established.

Example of customer service level

Firms can get recognition from their customers by meeting specific performance standards. For example, a call center must talk to several clients every month. And supply firms need to send all the orders they get to the customers who asked for them. That way, those customers will not be disappointed and might even order from the company again soon.

Parameters of Customer Service Levels

Parameters to be maintained in Customer service level
  1. Order Fill Rate: It measures orders met from the company stock at any given point. That does not deal with manufacturing and generation of products and entirely depends upon the inventory on hand.
  2. Stockout Rate: A company does lose out on a substantial number of orders during a stockout. These are never regained back. The better designed a company’s service level optimization is, the less it faces stockouts.
  3. Back-order Level:  It is the measure of orders waiting to be filled. A company does best when it has a minimum number of back-order levels to be cleared.
  4. Probability of on-time delivery: This is an important parameter and directly proportional to a company’s service level. Developing a good and promising image among the other competitors takes a long way.

A good Customer Service plan is like the radar and must be drawn out well ahead of the business.

Too low a bar would compromise the ambitions of a company, while too high a bar will ruin the game and cause a service level drop.

The employees working in the chain must be appropriately trained and prepared to follow the guidelines, come whatever may!

Five customer service standards that must be maintained

  1. Patience must be one of the first things to be mastered while speaking to the customer.
  2. Use proper language and reveal a polite and humble manner.
  3. Having a clear idea of what the buyer is looking for.
  4. Having an ability to ‘read’ the customer and suggest options accordingly.
  5. Lastly, the customer must not feel intimidated by the salesperson. All these points are targets to be fulfilled. But Customer Service Level is not a goal; rather, it is the outcome of a properly designed and efficient system.

In the case of business-to-business (B2B) transactions, the customer service level influences supplier evaluation. Hence quality needs to be maintained in every transaction for better future business prospects.

Levels of customer service

What are the three levels of customer service?

The levels of customer service are expected level, desired level, and an unexpected level.
Expected level: The vendor provides service at the minimum quality level to the customer.
Desired level: It means the vendor provides service as per the customer’s wishes, and he reaches the desired level of the customer most of the time.
Unexpected level: It means the vendor provides service beyond the customer’s expectation in a good way.

How do you measure customer service level?

You have to measure the customer service level in terms of customer satisfaction and their reviews of your products or services.

Customers are vital to all kinds of business. Generally, 80 to 90 percent of customers purchase your products or services after looking at your reviews.

Positive reviews help to improve your business, and negative reviews badly affect your business.

We use the Key Performance Indicator (KPI) to measure the performance. For example, the Net Promoter Score (NPS) is a good and standard KPI to determine customer satisfaction.

NPS helps to classify your customers into three categories.

  • Promoters: This category of the customer helps to promote or develop your business by giving good reviews about products or services.
  • Passives: This category of the customer is a customer with less response. He will be neutral, and he will not comment positively or negatively.
  • Detractors: This customer category may give a negative review of your products or services.

So, this helps you find out where you are and how your performance is in the eyes of your customer and as per the feedback, you can find out the areas that need to be improved. Hence enhance your performance.

Customer service levels and costs

It isn’t easy to balance costs and customer satisfaction. However, if you want to improve customer service levels, you must keep a proper and sufficient inventory.

Unfortunately, holding expensive excess inventory means extra costs to the organization.
Hence, it is a big challenge for the manufacturer to balance customer service levels and costs.

How do we achieve high service levels and low operational costs?

The manufacturer will have two options. Either he has to add inventory to increase service level or minimize the inventory to cut extra holding costs.

He can balance both with the help of modern technology and the best practices.

For example, advanced software helps optimize the supply chain management system to have sufficient inventory and make decisions to reduce operational costs.

How does inventory management help to improve customer service levels?

You know that order fulfillment is an essential parameter in customer service. When you fulfill the customer order successfully, they will return it to you.

Below are some inventory management processes that help improve customer service levels.

  1. Efficient supply chain: An efficient supply chain helps avoid stockouts, slow deliveries, and incomplete orders. You can achieve this by automating the supply chain management process.
  2. Perfect forecast and procurement: Forecast the product demand perfectly and have stock of those products so that you can deliver the product to customers whenever you want. If you fail to predict the product demand correctly, there will be a chance of product stockouts.
  3. ABC analysis: You know ABC analysis is an inventory classification method. With its help, you can segregate the products in your warehouse to be aware of the fast-moving products and most valuable products. Then you take the necessary action to stock those products.

What is a customer service level agreement?

A customer service level agreement (SLA) is a contractual agreement between a customer and a vendor that defines service level expectations from the customer’s point of view. In other words, it outlines the minimum acceptable service that the customer can expect from the vendor.

Usually, a customer service level agreement occurs between companies and their vendors. But sometimes it happens between the two departments of the same company.

Customer service level agreement template

Customer service level agreement template

What is the importance of a customer service level agreement?

  • It is a type of vendor contract. It clearly defines metrics, including expectations and responsibilities.
  • It prevents ignorance from both parties in the situation of issues regarding service.
  • It protects both vendor and customer.

What does it contain?

  • It contains the description of the service
  • Expected service level
  • Responsibilities of both vendor and customer
  • Type of penalty for contravention
  • Contract for adding and removing metrics

Conclusion

The customer service level will vary depending on the type of company and the product or service offered.

A company should always strive to stay below its customer-service level to provide quality, timely service to all customers.