Customer service levels measure the ability of a value chain to satisfy customer demand. If your products are remotely substitutable and in a competitive market good customer service is invaluable.
Even if you are a near monopoly, bad customer service often irritates customers and they will look for the closest opportunity to switch suppliers with somewhat substitutable products.
Customer service is measured using a variety of metrics - Line Fill Rate, Order Fill or Perfect Order, On-time delivery, Dollar Fill Rate, Unit Fill Rate.
It is typically measured as Line Fill Rate (LIFR). The true measure of customer service is the degree of success you achieve on every opportunity to interact with your customer. Only complete satisfaction is recorded as a win, not partial resolutions. The below chart provides a hierarchical drill-down into service failure.
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