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How to create a Customer Happiness Index

By Andrew Dalglish -

In my last post I put forward the idea that every business should measure its performance against a stakeholder ‘Happiness Index’ with a particular focus on customers.  As the customer’s voice within the organisation, responsibility for this index lies at the marketer’s door.

Before we go any further I’d like to challenge the received wisdom that it’s commercially sensible for every business to invest in enhancing customer happiness.  This isn’t always true and there are two notable exceptions.

The first are businesses in sectors where demand persistently outstrips supply.  The second are businesses who have a compelling, sustainable and unique source of competitive advantage.  For example, Ryanair enjoys strong year-on-year passenger growth but customers frequently complain about the Ryanair experience.

Most of us though have good reasons to be concerned with customer happiness.  Replacing those who defect is expensive, future sales are further damaged through negative word-of-mouth and a transient customer base makes the business a less attractive investment proposition.  Let’s also not forget our own personal pride and the morale of those around us.  After all, no one wants to work for the bad guy.

The basis of the index is a customer survey.  As standard, this should include three core metrics which gauge overall happiness levels – satisfaction, loyalty and propensity to recommend.  The best indices then go one step further.  They provide guidance on how to improve overall happiness by identifying specific behaviours which have the greatest impact and measuring performance against these.

The second step is to survey customers in an appropriate and objective manner.  Typically this will be through a series of short, structured interviews.  Strategically important customers might also be surveyed in greater depth to signal your commitment and obtain deeper insight.

Finally, maximise the impact.  Create a management dashboard to ensure Board level visibility and gain support for action.  Cascade results throughout the organisation in an easily digestible format to foster cohesion and help develop a customer-centric culture.  Hold workshops with customer facing colleagues to ensure they understand expectations and are properly equipped.  And if you really want to move the needle, link bonus payments to customer happiness.

Read more about our approach to business-to-business (B2B) customer satisfaction surveys.

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