In economics terms, you’ll often see discussions around lagging indicators and leading indicators. Leading indicators are metrics that signal the market’s direction. Think stock indexes, new unemployment claims, or new construction permits. A lagging indicator is a metric that becomes measurable only after an economic shift has taken place, like unemployment duration or labor costs.
In business, you could focus solely on lagging indicators like client retention and attrition, or you can be proactive and create a leading indicator to influence those lagging indicators: the satisfaction score.
We’ll assume you’re the proactive sort, so we’ve outlined how we created our Client Happiness Index (CHI) to measure client sentiment and anticipate long-term retention.
We ask the following question in every client survey: “On a scale of 1-10, how happy are you with our offering, that you would refer us to a colleague or friend?”
We then group responses into three buckets based on their scores:
Each response then earns a value per each bucket:
Add up all the numbers, divide by the total number of responses, then multiply by 100 to calculate CHI.
You’ll notice that we err on the conservative side and give negative responses a heavier weight than positive responses. This is intentional. In a world where it’s so easy to tweet or post a negative review, not to mention complain in-person to colleagues or business associates, disgruntled clients can weigh very heavily on your business’ performance. We’ve chosen to capture this by giving disgruntled clients a heavier effect on our CHI.
How you choose to build your benchmark is completely up to you. The realities of your business, and how strongly impacted it is by positive or negative client sentiment, will determine how liberal or conservative you are with how you weigh feedback.
It’s easy to think that an average is sufficient. Admittedly, CHI or another type of satisfaction benchmark might appear like more trouble than it’s worth, but it provides amazing insight into what your customers really think. For example, imagine asking four clients how happy they are with your offering, and you receive the following responses:
|Response from Client #1||6|
|Response from Client #2||6|
|Response from Client #3||10|
|Response from Client #4||10|
If you were to stick to averages alone, you’d give yourself a high five. An average satisfaction of eight sounds pretty good, doesn’t it? But when you use CHI, you see immediately that you have a problem. By giving greater weight (and negative weight at that) to disgruntled clients you see that you do actually have satisfaction issues. CHI primes you to proactively respond in a way that an average alone doesn’t.
Because the theoretical values of CHI range from as low as -200 to as high as 100, you can really measure the extremes of satisfaction and dissatisfaction, getting a deep insight into client mindset. This is increasingly important with review sites and social media facilitating client complaints. Using CHI gives you an early warning sign to turn things around before issues become public.
No credit card required - just a desire for happier clients