Customers are essential to all the business. 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. This article discusses all that you know and much more. Read on to find out.


Customer service level is the percentage of occasions on which 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.

Customer Service Level

What does it mean?

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 extremely important.

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.

The percentage of occasions that a company fulfills its promise to the buyer is measured as the Customer Service Level.

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

Let us consider an example, a call center must have a target number of callers it deals with every month, and it must maintain that.

A supply firm needs to fulfill all its customer’s orders and follow a set of regulations every month.

They must make sure their inventories are well stocked, which will protect their customers from a stockout and clear old orders when restocked.

That is a performance level that the firm needs to maintain, which will help them to find recognition among the customers.

Parameters to be maintained

Parameters to be maintained in Customer service level
  1. Order Fill Rate: It is the measure of orders that are met from the company stock at any given point. This does not deal with anything related to the 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 a very important parameter, and has a directly proportional relationship with a company’s service level. Developing a good and promising image among the other competitors surely takes a long way forward.

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 with 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!

5 customer service standards that must be maintained

  1. Patience must be one of the very first things to be mastered while speaking to the customer.
  2. Use of proper language and revealing 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 suggesting 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.

What are the levels of customer service?

The levels of customer service are expected level, desired level, and an unexpected level.

The vendor provides services in three different levels.

  1. Expected level: It means the vendor provides service at the minimum quality level to the customer.
  2. 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.
  3. 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 about your products or services.

Customers are very important 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 category of the customer 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.

How does the inventory management process help to improve customer service levels?

You know that order fulfillment is an important parameter in customer service. When you fulfill the customer order successfully, they will definitely come back to you.

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

  1. Efficient supply chain: An efficient supply chain helps to avoid the problem of 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 properly, then 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 so that you are 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 is a document that defines the expectation of service level by a customer from his vendor.

Usually, a customer service level agreement takes place 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

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