Measuring Customer Happiness
You need to know if your customers are happy, but it’s hard to measure.
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We all want happy customers! Happy customers stay loyal to our business, spend more with us over time and are the best evangelists for our products. As a result we work hard to make them happy.
But, how do we know if they are happy?
We can ask them, of course, but it’s not clear if they would tell the truth. If you have a successful business, you likely have far too many customers to ask them all individually. Even if we could, customer happiness changes over time so asking them in the past isn’t enough to tell us whether they are happy right now.
There are many metrics, but all of them are flawed. Here are some examples:
Net Promoter Score. This is a popular metric that took the business world by storm in the early 2000s as it is very easy to collect and seemed like a good gauge of happiness. It just asks a simple question: “On a scale of 1 to 10, how likely are you to recommend this product?” Unfortunately, it has become so popular and overused that the results have gotten less reliable. Even worse, academic research has shown the NPS might never have reflected customer happiness in the first place.
Customer Surveys (CSAT). Instead of asking a single question like NPS, longer customer surveys can be rolled up into CSAT scores. While these might be more reflective of happiness than NPS, it struggles from selection bias. The people who choose to complete the survey are rarely representative of the entire customer base! For example, people who have had a bad experience are typically more likely to fill out these surveys.
Product Engagement. Instead of relying on what customers say, you can look at their engagement with your product. In theory, customers that use the product heavily on a regular basis should be happier, right? Unfortunately not, as heavy use can actually demonstrate frustration on behalf of the user as they struggle to get the outcomes they need.
Quarterly Business Reviews. Enterprise companies have the luxury of meeting with their customers on a quarterly basis, which is a great time to ask them about happiness. But if you are a customer of an enterprise company, why would you tell the vendor if you are really happy? Customers want to retain negotiating power for renewals and if they tell you they love the product and can’t live without it, they lose that power.
Renewals/Retention. The ultimate measure of happiness is whether the customer buys again. If they keep using the product, or better yet buy it again, that’s great! But that’s a trailing indicator and you won’t know you’ve lost a customer until they are already gone. In business we need leading indicators so we can address problems.
In an attempt to overcome the flaws with any given measure, some CSAT scores are composites of two or more of these measures. That is better, but if the individual measures are flawed any aggregate is going to be flawed as well.
So, if it’s so hard to measure customer happiness what should we do?
The most reliable approach I’ve seen is to chart the journey of a happy customer. If a customer is happy, what would they do? How would their relationship to the product change over time? If you can chart out that journey you can look at each customer and ask if they are on that path or not.
For example, if you have a web application, how would a happy customer use the product? How often would they come back and what would they do if they did? Would they invite others to use the product, or just repeat the same actions every day? By looking at the journey instead of any given point in time you can get a more reliable (and predictive) measure of whether they are happy.
No product has a single journey every happy customer follows, so you might have a series of these paths. That’s good! It means that you have multiple ways to make a customer happy and all you need to do is help every customer get on one of them.
I have been somewhat harsh on measures of customer happiness here, and they are all useful in their own ways. Even flawed, any measure of customer happiness is better than nothing! None of them are a replacement for knowing your customers well, and if you do then you should have more ideas on how to measure happiness.
Spend the time, get to know your customers and understand what makes them happy. Then, try to measure it as best you can!
For more on Customer Success, see: