What is the Customer Happiness Index in SaaS and How Can You Increase It
Curious about the Customer Happiness Index (CHI) and how it affects your growth?
This article will answer your questions. Read on as we explore what CHI means for SaaS companies. We’ll show you how to measure it and offer strategies for increasing this important metric.
- The Customer Happiness Index literally measures happiness at different stages of the customer journey.
- Key indicators used to measure CHI include product usage frequency, stickiness, and product usage depth.
- The Customer Happiness Index isn’t the same as customer satisfaction. The latter does the bare minimum to meet customer needs. CHI goes the extra mile to wow customers and keep them happy.
- Happy customers are a more accurate predictor of loyalty than satisfied customers.
- Reasons you should care about optimizing your Customer Happiness Index:
- Churn prevention
- You increase the likelihood of ordinary customers becoming loyal
- More revenue from customer retention and account expansion
- How to measure the Customer Happiness Index? You’ll often need to track different metrics to know how happy customers are. Some of those metrics:
- Measure customer satisfaction score
- Measure customer happiness and loyalty with a Net Promoter Score
- Calculate customer effort score
- Measure product stickiness as part of the Customer Happiness Index
- Measure customer engagement score
- 10 Strategies to increase the Customer Happiness Index
- Personalize product experiences and in-app communications
- Drive customer success with ongoing product education
- Provide guidance and remove friction with UI feedback
- Deliver top-notch customer service with self-service support
- Celebrate customer milestones and make them feel appreciated
- Implement customer loyalty and reward programs
- Collect feedback at different touchpoints and act on the customer data obtained
- Reach out to unhappy customers and offer help
- Go the extra mile—offer gifts and other means of appreciation to show loyal customers that you care
- Offer contextual upsells and drive additional value
What is the Customer Happiness Index?
The Customer Happiness Index is a relatively new metric developed by Hubspot that measures how happy a customer is with a service, product, or experience. It takes into account key indicators to quantify CHI: product usage frequency, stickiness, and product usage depth.
The usage frequency tells you how much a customer uses your tool. It’s obvious that a customer who uses a product more often than average is most likely very happy with it.
Usage depth measures how many features your product customers are using and how well. No brainer here too, the more features the customer use, the happier they are.
Stickiness aims to identify the features adding the most value to customers that make them continue using the product.
Customer Happiness Index vs customer satisfaction
It’s easy to confuse customer happiness and satisfaction. Both metrics seem to be measuring the same thing, but there are key differences between them.
For one, customer satisfaction does the bare minimum to meet user expectations. But customer happiness goes above and beyond to create memorable experiences that exceed expected standards.
As a result, customer happiness is a more accurate predictor of loyalty than customer satisfaction.
Why is measuring and optimizing the Customer Happiness Index important for SaaS?
There are several reasons SaaS companies should be big on optimizing customer happiness.
The first is that this metric enables you to identify customers on the verge of churn. That way, you can easily segment and try to gain them back.
Secondly, consistently exceeding customer expectations increases their likelihood of becoming loyal–which translates to repeat business and free word of mouth.
Lastly, optimizing for customer happiness means fewer angry customers. In other words, fewer people will take to social media and review sites to talk bad about your company.
How to measure the Customer Happiness Index
The tricky thing with CHI is that there isn’t a single metric that tells you a customer is happy—it’s more about looking at a bunch of factors to get a clearer picture of the customer experience.
Some of those important metrics:
Measure the customer satisfaction score
CSAT surveys help you measure and monitor user satisfaction. This survey is best used immediately after a user interacts with a feature for the first time, hits a significant milestone, or just finished communicating with support.
Trigger CSAT surveys at different touchpoints in the user journey to understand their experience after different types of interactions.
Example from Nicereply: customers receive this satisfaction survey each time a support ticket gets closed.
Measure customer happiness and loyalty with a Net Promoter Score
NPS surveys use an 11-point scale to ask customers how likely they are to recommend you to others.
There are three categories of responses:
- Detractors: Those that give you scores between 0 and 6. They’re the least likely to recommend you. In fact, these customers are most at risk of churn.
- Passives: They’re in the middle. They enjoy your product but are not sure they want to recommend it to anyone. Passives rate you a 7 or 8.
- Promoters: They’re the real superfans. They love the overall customer experience and are eager to promote you. These people give you NPS scores of 9 or 10.
Calculate customer effort score
The customer effort score measures customers’ effort when interacting with your company.
Common use cases include when customers are trying to make a payment, resolve an issue, or try out a new feature. The more energy customers spend to get things done on your app, the less happy they become.
Customer effort scores are typically measured with emoticons or scales like this:
Measure product stickiness as part of the Customer Happiness Index
As mentioned earlier, happy customers are the most likely to stick with your product. You can easily measure product stickiness by calculating the ratio between your daily and monthly active users:
Measure customer engagement score
The customer engagement score tells you how well users interact with your product. To measure this, start by defining the most important actions and events in your tool.
Examples will be support tickets, account upgrades, and renewals, feature activations, etc. Assign engagement values to your events and use product analytics to track engagement.
Calculate the total score using the following formula:
10 Strategies to increase the Customer Happiness Index
Remember we mentioned customers would be happy and fall in love with your product when you go the extra mile? This section shows you ten different ways to do that.
Personalize product experiences and in-app communication
Customers love being treated like individuals, moreover, they absolutely expect it from you. In order to succeed in a competitive market, businesses must take individual user needs into consideration and personalize product experiences.
To get started with personalization, segment users into groups based on their jobs-to-be-done and unique needs. Next, tailor in-app experiences and deliver promised value to each segment.
A good example of SaaS personalization is using branched onboarding flows to get customers on the shortest path to success based on their needs.
That’s what ConvertKit does. They have different onboarding flows for people new to email service providers, and those merely switching from competitors. This is essential because newbies will need to learn about the tool, but veterans might want to skip to importing their contacts, for example. Branched onboarding ensures everyone is happy.
Set up customers for success with ongoing product education
Effective product education goes beyond the primary onboarding you provide new users. It means you keep giving users the guidance they need as they move through different stages in their journey. The benefits of this include higher retention, faster feature adoption, increased revenue, and of course, more happy customers.
Provide guidance and remove friction with UI feedback
User interface (UI) feedback is how your product responds to user actions. Design the UI in a way that provides positive experiences and effectively guides customers to avoid friction.
For example, incorporating feedback error messages in your signup forms can reduce friction and increase conversions:
Deliver top-notch customer service with self-service support
Self-service support reduces friction and ensures customers can find solutions to basic problems no matter the time of day. The load on your customer service department is also reduced because of that.
Celebrate customer milestones and make them feel appreciated
Celebrating important milestones in the user journey is a good way to give users a dopamine boost. Because they feel happy and successful, they will naturally continue using the tool to hit the next milestone.
Implement customer loyalty and reward programs
Loyalty programs build emotional bonds between you and the customer and will get many of them committed to your brand.
There are different types of loyalty programs including:
- Points-based program: Customers are rewarded with points for using the product or referring others. These points can later be converted to valuables like free time on your tool.
- Referral programs: Solely created to reward customers for introducing people in their network to your product.
- Mission-driven loyalty programs: Invite users to support a cause like climate change, help poor children go to school, etc. Example from Whereby:
Collect customer feedback at different touchpoints and act on it
Passive surveys are on-demand survey prompts that allow customers to give feedback when they feel like it, without being asked. Examples: product reviews, brand mentions, and always-on feedback widgets.
Reach out to unhappy customers and offer help
Pair qualitative feedback with other satisfaction scores like CES or CSAT to get a full picture of what’s causing unhappiness. Then, segment the responses to determine the most recurring feedback and what you can do about it.
For instance, you could collect qualitative NPS responses and tag them as in the image below to fully understand the reason for low scores.
But don’t stop there. Act on the feedback by getting back to customers through automated responses or personalized emails, as in the below example:
Go the extra mile—show loyal customers that you care
How quickly you respond to customer inquiries can significantly impact their experience, but adding small tokens of appreciation will wow them.
If you‘re wondering how best to appreciate customers, just listen to them. You’ll learn a lot about customer needs and desires by just paying attention to what they say and do.
For example, one of Userpilot’s most consistent customers jokingly asked us for a dream customer t-shirt. We took it seriously and had it delivered in no time.
You can tell from his post below that he was surprised and excited.
Offer contextual upsells and drive additional value
Upsells and other account expansion strategies can push your Customer Happiness Index if done correctly. The tricky thing about this is that we all buy, but nobody likes to be sold stuff at random moments. So, you have to be certain that the account upgrade you’re recommending is what customers need at that point in their journey.
Netflix uses this strategy well. They show you all the perks that come with different plans, but don’t bother you again until you’re about to take an action outside your plan – like watching on bigger screens or viewing on different devices at a time. Such contextual messages work well because they’re sent exactly when the customer needs them.
A similar example from Loom: the company waits for users to hit the 5 mins recording limit several times before recommending an upgrade.
SaaS companies can unlock new growth opportunities by tracking and optimizing CHI. Their customers will go on to have great experiences and won’t want to stop using the product. Win-win!
Hopefully, this article has shown you simple strategies for optimizing your Customer Happiness Index. Go ahead and implement the ones that stood out to you!
Userpilot can help if you need a third-party tool to make the process easier. Our platform enables you to increase CHI through product analytics, user segmentation, and personalization. Book a demo to get started.