KPI service

KPI the key performance indicators of the company or division. The number of KPIs may vary depending on the chosen strategy and is limited only by the imagination of the head of the company. But there are KPIs that are “universal” for any service unit.

How to choose performance indicators for the service?

For example, if the service in the company is considered only as an auxiliary unit, then it makes sense to set such key indicators as NPS (customer satisfaction index), response time to customer requests, service engineer’s departure time, customer resolution time for technical support and departure into place.

These KPIs can be set and taken into account both in terms of average indicators and more detailed: for example, the response time of technical support should be different depending on the category of client or depending on the client’s problem: equipment doesn’t work or work partly without any important client options.

If we are talking just about a request related to a usual usage of equipment (for example, performing maintenance), it is advisable to establish other time standards for the reaction time of technical support. It makes no sense to install the same KPI for urgent and for ordinary requests, because this will significantly overload the service, will require additional resources and costs.

How should KPI be like according to response time request?

For example, you define that in case of critical equipment breakdown, which entails stopping the production of the client, the application must be processed within 4 hours. It is clear that there are peak loadings of the service, but on average for 70-80% of applications this requirement must be met. For requests related to normal operation, the application processing time may be 3-4 days.

KPI for the departure time of the service engineer in case of an emergency stop of the equipment can be set, for example, as 2 days in 70% of cases. At the same time, during normal operation (maintenance, customer training, etc.), the departure time may be 4-5 days or more, by agreement with the customer.

KPI requirements are determined by market and market standards. It makes no sense to set the minimum time, if competitors solve the same tasks for weeks. To get the “wow effect,” your KPI must be 20–30% higher than competitors' standards at a comparable price.

Of course, if the company does not consider money for the service, then it is possible to recruit such a number of employees that will ensure 100% KPI implementation even during peak loads. But at the same time, some employees will simply not be involved. This affects costs, your marginal profit and, as a result, the price you can offer to the customer and the competitiveness of the company as a whole.

KPI service download

For an objective assessment of the service load and the optimal costs that your strategy suggests (the highest quality, the lowest price, or the average when targeting a specific market segment), you need to install KPI for the service load.

In foreign companies, this indicator is called Utilization and is defined as the ratio of productive hours / available hours. Available hours are the planned working hours for each employee taking into account vacations, holidays and weekends. You can take in a certain time interval, for example, a month. A productive clock is the time spent directly on solving customer problems. By productive hours do not include training (training) and the disease. You can independently assess the load of your service in the presence of statistics. It is best to take the statistics monthly for 2-3 years, then you can assess the effect of seasonality on the service.

Does your service work effectively?

But by themselves in the context of one company, these data are not sufficient. To understand how effectively your service works, you need to have an idea of ​​the “normal” KPI values ​​for service departments of other companies. Someone considers “normal” load at 45-50%, others 80-90%. Managers see only external manifestations: people work, when there is constant fuss, then everything is fine, no more loading is possible. Or vice versa, if everything is quiet and calm in the service, then people are not working, then they need to add tasks and reduce their salary costs. This is an extremely erroneous judgment. The fact is that there is a productive time - aimed directly at solving current tasks and unproductive, which, in fact, goes to preparatory work, is lost.

If the service KPIs are set correctly, then the work proceeds on the principle of a conveyor, without any fuss or noise, with a minimum percentage of unproductive time. If KPIs are installed incorrectly (or are absent altogether), then bottlenecks and overloads periodically appear in the chain of interaction between people and departments.

This can be seen as a car driving in a traffic jam: someone slowed down, everyone else slowed down after him. Then he overclocked, all the others overclocked. "Ragged" mode of operation leads to peak overload. This problem is often tried to be solved by taking on additional employees. But, first of all, these are additional expenses. Secondly, additional employees are more often taken by those who ask, and not by those who really need it.

As a result, nothing drastically changes, just in one department, employees drink tea with cookies, and in another they rush like stung, clutching at 10 projects at the same time and not having time to end up anywhere (here you need to understand that during overloads when people often have to switch from one task to another, up to 20% of the time is additionally spent on simply remembering the original and current data for each task, the so-called “learning curve”).

The problem is solved, first of all, by optimizing business processes and establishing “normal” KPIs for each functional unit from an individual employee to the division and the company as a whole. But this is a topic for a separate article.

There are other KPIs in addition to Utilization, which consider the processing of employees and work on the weekend. We will not dwell on them; this topic requires deep analysis. But it is important to understand that when planning any changes in a KPI company in terms of load, these are the most important indicators for planning the result you want to get.

Other important KPI services are turnover per employee, cost per hour, marginal profit rates, expenses for training, administration, etc. We will look at other articles on the development of first-class service as an important competitive advantage of the company.

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ANTON DOMRATSHOV 27.03.2019 в 17:35 # Reply
KPIs described in the article can only be used to estimate work of middle (line managers) and the departments which they lead. At the P & L level, most KPIs do not work, because in the end, it all comes to the efficiency of service itself, that is, net profit. And some types of services, in principle, cannot be measured in terms of key performance indicators, as they are an integral part of contractual obligations (for example, a certain number of employees reserved for work at the customer’s facility)
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MAKSIM KLEMESHOV 28.03.2019 в 00:51 # Reply
Anton, hello! I am glad to see on my website my strictest critic from Executive)) In this case I agree with you. The article says about Kpi of the business units. But at the very beginning I noted, that you can have as many KPI, as your company need. These indicators are used not only to evaluate their work, but also as "reference points" in the implementation of the company's strategy. For owners and top managers, the main KPI is profit. Let's say the task is to increase it by 30% during the year. This can be done by increasing sales and cutting costs. The standard way is to reduce the cost of auxiliary units, which often include the service, set KPI workload (utilization) to 90-95%, which reduces the service cost, and increase the number of sellers (or change their motivation - tied bonus to the number of calls, meetings and other KPIs). Such a strategy can work in growing markets. Need to be faster than competitors, look for new customers. But when the number of customers in the market is not growing or even decreases, the only way to increase sales is to pick up customers from competitors. That means you need to be better than your competitors. There are statistics - the excess of market standards of service to a certain limit leads to almost proportional sales growth. And if you choose this strategy, it is more logical to install other KPIs for business units. For example, for a service, you need not to increase, but to reduce the utilization in order to travel to customers faster, respond to their requests faster, etc. KPIs, which affect how customers evaluate the quality of service, become priorities for the middle managers and they units. Investments go to the service, not to sales. But for the head of the company, nothing has changed - for him, the KPI remains the level of profit. The task is the same, but solution different. If the units reach their KPI and the profit does not increase, then the wrong strategy was chosen. But if they do not achieve it, then the problem may be not in wrong strategy, but in the implementation of the strategy. Not everything is clear here. Therefore, it is important to correctly determine the KPI for line managers and departments. In essence, KPI formulation is the decomposition of strategic tasks to the tactical and operational levels. As for the immeasurable indicators, in your example (if correctly understood) it is just the cost of the service, reducing the margin on the project of the sales department and I see no problems with its calculation. For the owner of the company in the short term, it does not matter from which source he makes a profit - from sales of equipment or from service or from both. It is important to see the real picture - who earns how much and how much is spent.
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NATALYA METELEVA 28.03.2019 в 09:08 # Reply
In general, I agree with the article. A few comments.
1. As a goal for the service in general used an increase in the level of repeat sales. If it falls - a question mostly to the service.
2. Engineers during technical support can identify additional tasks at the customer, which will lead to the sales (KPI - support generated leads)
3. The duties of the department may include conducting courses for customers, participation in exhibitions and so on, so that downtime is reduced to zero.
4. It is necessary to monitor the sales of specific equipment lines in order to retrain additional engineers if the level of sales in these lines increases.

5. The article does not say anything about specific tools for maintaining statistics on the work of the department. In addition, with automatic generation of reports. What will the author advise? Do not advise put the data into Excel, right?
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MAKSIM KLEMESHOV 03.04.2019 в 14:26 # Reply
1. I agree that the service directly affects to repeat sales. The question is how much the company's management is aware of this influence and objectively evaluates the contribution of service and sales to the company's results.
2. They can, if they know how to do it and are sufficiently motivated.
3. This is a question of the development of new directions in the service - training, making presentations for clients, developing new service products. A very important question if we consider the service as an additional profit center. Again, a lot depends on the motivation and competence of employees and the manager. Some people formally completed their work and calmed down, while others are constantly looking for and trying to realize new opportunities. It also happens that the service offers interesting products that can be in interesting in the market, but lack the ability to translate these initiatives into concrete numbers and strategies. That is the more important, the higher the amount of investment required to implement the proposals. Or there is just an overload of routine work, when the manager does not have time to develop and improve the service. Each case must be viewed separately.
4. This is clearly the responsibility of the service manager together with the sales department.
5. It is possible and in Exel the first time. It all depends on the size of the business. Over time, everyone comes to conclusion, that they need some kind of CRM systems. Like Sales Force for example.
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