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measuring customer happiness

The Smile Metric: How Organizations Measure Customer Happiness

Virtually all companies claim to care about customer happiness. Yet, they select metrics and KPIs that measure anything but happiness.

Perhaps the most popular measure is Net Promoter Score (NPS). Using a single-question survey, the framework measures a customer’s propensity to recommend a product or service to someone else. While some argue that advocacy and customer loyalty are effective analogs for customer happiness, they are, of course, different things. Then, of course, so are the procedural concerns.

“Honestly, I’m skeptical of NPS’s utility,” said ex-Pinterest product manager turned investor, Sarah Tavel. “How NPS is calculated makes it an easily gamed, statistically noisy measure of intent, not of behavior.”

Others use Customer Satisfaction (CSAT) scores as a proxy for happiness. Another single-question survey, this one asks, “How satisfied were you with your experience?” Again, the metric gets close to happiness, without fully representing it. Besides, as JotForm CEO, Aytekin Tank, explains, “Satisfaction doesn’t guarantee loyalty. Satisfied customers leave companies every day.”

A few even use Customer Effort Scores (CES). Measuring the amount of effort customers have to invest to interact with your business, CES appears even further away from happiness than NPS and CSAT.

All three popular metrics measure in-the-moment satisfaction. Since companies issue surveys immediately after transactions, customer responses are inextricably connected to purchases and sales. They also lack directionality. By themselves, they don’t express the why behind a score. Whether NPS defines someone as a promoter or detractor, the factors that contributed to their satisfaction, well-being, and happiness remain hidden.

For organizations committed to cultivating genuine happiness among their customers, measurement requires a fundamental rethink. That process starts with a deeper understanding of what happiness truly means.

What is happiness?

Happiness is an enigmatic concept. Philosophers have argued over its composition, value, and pursuit for thousands of years. Aristotle believed happiness emerged from achieving all the goods—health, wealth, knowledge, friendship, and so on. Centuries later, John Stuart Mill suggested happiness was simply the presence of pleasure and the absence of pain. The list of concepts, definitions, and revisions goes on.

Since the 1980s, the World Database of Happiness, an archive of research on the subjective enjoyment of life, has collected different measures of happiness. Its archives now hold more than 2,000 different standards. Those measures fall into one of three categories: overall happiness, hedonic level of affect, and contentment. The former is somewhat of an overarching concept, encompassing the affective and cognitive components of the latter two.

Research tells us that overall happiness is multidimensional. It “includes three major components—life satisfaction, positive affect, and negative affect—and allows for the idea that a large component of personal happiness is subjective,” explained Nicholas Alvaro Coles, a research scientist at Stanford’s Center for the Study of Language and Information.

Perhaps counterintuitively, happiness is not something you can pursue, says Blake Morgan, a keynote speaker, bestselling author and the founder of Customer Experience Community.

“Happiness in our personal lives doesn’t happen when we chase instant gratification or quick wins,” she continues. “Happiness comes from putting blood, sweat, and tears into something we believe in, and seeing the fruits of our labor come to life. You can’t buy relationships, and the same is true for businesses.”

Such a complex emotional state cannot be reduced to a single point-in-time survey based on recommendation (NPS), satisfaction (CSAT), or effort (CES). Instead, companies need to understand what unique factors strongly correlate to happiness. Only then can they begin designing interventions that will meaningfully engender customer happiness.

Blake Morgan
Blake Morgan is a keynote speaker, bestselling author, and the founder of

Building a happiness metric

Indices like NPS and CSAT thrive on their simplicity. Both are single-question surveys. They’re quick to set up, fast to issue, and easy to interpret. But problems arise when you use simplistic metrics to track complex qualities. To accurately measure happiness, organizations must design a metric that embraces intricacies and nuance.

Specifically, measurement approaches must have two qualities:

  1. Breadth: Happiness has three major components (life satisfaction, positive affect, and negative affect) and each of those components has myriad drivers. The level of respect someone enjoys, harmony in their relationships, material satisfaction, quality of health, achievements, sense of control, and pleasure all contribute to a sense of overall happiness. That isn’t an exhaustive list of contributing factors, either. To accurately measure happiness, metrics must gather multiple data points on contributing factors.
  2. Directionality: Happiness is not a fleeting burst of pleasure. It’s also a long-term emotional state. It follows that happiness measurement cannot solely rely on in-the-moment data points. To solve for happiness, one must aim to track customer happiness over time, creating baselines and directionality.

Few organizations have taken the plunge, investing sufficient time and resources to craft their own happiness yardstick. Ipsos MORI, however, has.

The market research company recognized that most existing metrics failed to reflect happiness. To create their own metric, they tapped factor analysis to examine correlations between 45 satisfaction attributes and customer happiness. That produced a set of eight factors:

  • Factor 1: Customer interaction with the product/service
  • Factor 2: Product/service development
  • Factor 3: Product/service testing
  • Factor 4: User engagement with the product/service
  • Factor 5: User performance analytics
  • Factor 6: User experience and management
  • Factor 7: Business & operational support
  • Factor 8: Overall Happiness Index

Their system remains a work in progress. They use reliability tests on each factor to determine the degree of consistency among the attributes forming each theme. Additionally, they leverage driver analysis to highlight the most impactful attributes on overall happiness and specific variables.

“The approach that we have developed does not rely on one single question, but instead pulls together a holistic overview of a KPI, which for our search engine is overall general happiness,” wrote the authors. “This detailed approach gives us a comprehensive review of a KPI and highlights specific areas where clients could not only identify the success of their performance but also how they could improve.”

If you can’t measure it, you can’t improve it

For years, companies have tracked an array of happiness-adjacent qualities. Customer satisfaction (the degree to which someone is content with a service or product), effort (the ease of interaction and resolution), and recommendation (whether someone would recommend your company to a peer) dominated the discussion around customer happiness. But all three are reason-based assessments. While related to happiness, they are distinct from happiness, which is a long-term state of mind. Chasing happiness-adjacent metrics may lead organizations down misguided paths.

“If you simply chase the good score on the NPS survey, you are going to get a lot of data that doesn’t really mean anything,” says Morgan. “It’s when you get curious about what is actually going on for customers, that’s when the magic happens. For example, when was the last time you called your company’s call center? It might be time to do that.”

To measure real emotions like happiness, self-reported surveys (like those used in NPS, CSAT, and CES) are common and convenient. However, unless the questions are asked correctly, the output may be fallible. As technology matures, organizations will have greater access to emotional measurement software and tools, artificial intelligence, and deep learning systems. These will power a new era of real-time, unobtrusive, and reliable assessment.

But no matter the mechanics of the metric, the categorical imperative is clear: to measure customer happiness, break down what makes customers happy, and work towards ensuring those factors. While your pursuit of customer happiness may never reach fulfillment, the pursuit itself is a noble effort.

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