Service employers couldn’t have asked for better. Guru.com, the online service marketplace, recently announced that their ranking system will be changed starting from January 2009, with a focus more on quality and customer satisfaction. Employers can now expect less headache in selecting a good service provider. As a Guru vendor I was initially a little apprehensive about the whole thing, until I read the details of the new system. To make it short, the new ranking system will be truly beneficial for clients and also freelancers who are really interested in doing some quality work for them.

What’s changed ?
The new algorithm will not look at how much money you have made from Guru or the feedback ratings you have garnered from clients. Feedback rating actually will not even have a place in the new ranking system. What will now matter most is how successful you are at attracting new clients (marketing), how much money you are able to make per client (sales) and how long you are able to retain a client over time (work quality).

The death of the raw score.
The current Guru ranking system calculates the rank using the following crude formula:

Raw Score = Sum [ Invoice Amounts * Feedback Ratings ]

For eg. if you have generated 4 invoices from clients your raw score can be calculated as below; the higher the raw score the higher your rank on Guru.

Do the math: The new ranking system.
In the new system quality will be more predominant. Your rank now will be based on 3 core indicators:
1. Customer Acquisition Rate ( CAR )
2. Customer Earning Rate ( CER )
3. Customer Retention Rate ( CRR )

The formula for calculating your Quality Score is given below, you can rank yourself higher on Guru by increasing your Quality Score.

Quality Score = CAR x CER x CRR

The Guru site elaborates all the metrics in quite detail so its no good to do the same here.

The Customer Acquisition Rate measures your ability to acquire new clients. In the old system if you were working with only a handful of clients and generating loads of money your rank would be higher. Now if you are unable to get new clients regularly your rank will start slipping; no longer you have the option to be content with working with your regular lot of customers, whatever the amount you make. Presently most vendors on Guru throw proposals at the wall and see what sticks. Now that is not wise. You have to really think it through if you really want to bid for a particular project and deliver a quality proposal for the same. This increases your likelihood of clinching the project deal and also increasing your CAR in the process. Finally its time to rev up your marketing department.

The Customer Earning Rate measure the average amount of money a freelancer has made per employer per month within the last 12 months. This is one of the important metrics as it shows which freelancer is currently most active and ready to take work.

The Customer Retention Rate measures the average amount of time a freelancer maintains a relationship with an employer. To qualify for this indicator the freelancer must have received a payment from the employer within the last 12 months. For e.g if you had acquired a new client 2 years back and are still getting hired by the same, then that shows that the client is satisfied with the quality of your work and is willing to work with you in the future.

The wonderful part of all this is that the algorithm calculation is totally transparent, so you can really get yourself to rank higher by following the rules consistently. Guru also has added a Quality Score calculator on their site for easy calculations. Finally developers (at least those using Guru) will bring (or rather have to bring) quality in their process and more importantly employers can expect to get superior work done for competitive prices.