Customer Health Score Can Improve Customer Retention

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    A business thrives on customers and a business growth depends on the customer retention rates. One way to identify this is by using the customer health score metrics.

    What is Customer Health Score?

    The health score of a customer can assess which customer will continue doing business vis-a-vis customers who are ready to switch to a competitor brand. This health score metrics depend on number the following factors:

    • The length of time the person has done business with your brand.
    • The number of products they have used or the number of times they have used your service. 
    • This also includes the amount of money they have spent on that product or service.
    • The number of times they have contacted the support team. The outcome of these calls.
    • The successful/unsuccessful attempt of upselling products to the particular customer.
    • Their feedback on various platforms (Google reviews, third party review sites, social media testimonials), satisfaction metrics on a survey.
    • Their engagement with the community.
    • How often they participate in referrals and marketing campaigns.

    However, one company’s ‘health’ metrics will differ from other companies. Your customer success team also plays a vital role in supplying user data points to the scoring metrics.

    Why is Customer Health Score Important in CX?

    Every decision you make will affect both the organisation and its user base. The customer success team needs health score data to create data-driven decisions. Data-driven decisions will dictate how you conduct marketing campaigns, offer personalized services and obtain customer feedback. There are three main reasons why a good health scorecard can make your CX better.

    1.Reduced churn:

    Happy consumers contribute to the business growth. The main aim is to reduce the risk of churn overall.

    2.Higher sales:

    When people are satisfied with the product offerings, it becomes easier to upsell new products. The main aim is to increase sales among your customer base.

    3.Better online reputation:

    Happier consumers will talk about your brand extensively. They will mention good reviews on Google testimonials, positive feedback on net promoter scores and word-of-mouth. This will build your reputation and bring sales via referrals.

    4 Ways To Enhance Customer Retention with Customer Health Scorecard Data

    A SaaS business relies on health scorecard data to identify potential churn rates or active buyers. However, customer retention rates also depend on the health scorecard metrics. Here are the 4 ways how a customer’s health score can increase retention rates.

    1. The scorecard data can detect current and future usage patterns:

    There are only two outcomes of a customer- they either leave or they might want to increase their purchase from the company. The scorecard data will offer interesting details on account usage, usage patterns and potential account expansions. A happy customer can purchase add-ons or convert to a paying customer from a freemium user. This enables you to personalize the experience for every paying user. At this point, continuously monitor and adjust the customer health scoring criteria to keep your offerings fresh and relevant.

    2. The scorecard data can detect potential churning customers:

    The customer health scoring is a valuable tool mitigating potential churn. Businesses can proactively identify these churn risks and implement targeted interventions to prevent it. Focus on allocating resources towards at-risk customers for efficient and effective support. Monitor changes in a customer’s health scores and track the effectiveness of retention strategies.

    3. The scorecard data can identify “healthy” customers:

    The scorecard data can identify top performing customers to maximize value and drive growth. A single customer health score, when good, indicates that they are a valuable user for the company. Use this data to prioritize and nurture existing relationships. Understand when to upsell and cross-sell opportunities. Allocate resources and effort towards satisfying your top customers. Continuously monitor and track changes in the customer health score dashboards to identify emerging top consumers.

    4. The scorecard data can detect offer personalized assistance:

    People may not use certain products due to learning barriers. The scorecard data can identify usage barriers or satisfaction metrics from prolonged usage. When this happens, seek feedback from your user base and close the knowledge gap. This can empower customer service teams to close feedback loops or provide faster technical assistance. Every assistance given to a user will determine people’s commitment to your products or services.

    Customer retention strategy in CX

    How To Measure The Customer Health Score?

    To measure the scores effectively, establish clear criteria and metrics. This can be achieved by implementing customer relationship management (CRM) tools or automated customer success platforms. Here are a few ways to monitor health scores:

    Choose criterias that align with your business goals:

    It is important to choose criteria that align with your business goals, objectives and actual product/service offerings. Look for metrics that provide actionable insights to the customer success teams.

    Create goal oriented metrics- both qualitative and quantitative:

    Consider both quantitative and qualitative metrics to get a comprehensive view of customer health. Standardized metrics include Net Promoter Score NPS surveys, Customer Satisfaction Score CSAT surveys and Customer Effort Score CES surveys. These metrics usually gauge happy-unhappy users with a single question. Ensure that you add an open-ended question to allow free expression. 

    Consider relative importance of each metric:

    Assigning appropriate weights to different customer health score metrics based on their significance and impact is crucial. Consider the relative importance of each metric for a fair and accurate representation of the scores. Seek input from customer success leaders and team members to determine which metrics hold certain merits. Monitor and evaluate the effectiveness of every metric.

    Segment “healthy and unhealthy” customers:

    Segmenting customers into healthy and unhealthy categories is a great way to utilize customer health scores. Identify common characteristics and behaviours among these segments. Curate targeted interventions that can address their pain points and specific requirements. Allocate resources accordingly to attend to “healthy and unhealthy” customers and track necessary changes.

    Three types of customer health scoring techniques in CX

    Numbered or Percentage Scale:

    Customer health scoring can be implemented using either a numbered scale or a percentage scale. Numbered scales offer a quick overview of customer health based on predefined ranges. On the other hand, percentage scales provide a more granular measurement based on specific metrics. Choosing between the two depends on the unique requirements of the business.

    Grading System:

    Categorizing customers into different levels based on a grading system is a great way to understand their overall health. Grades like A, B, C, etc., help prioritize actions and strategies to improve customer health. Regularly updating and reassessing the grading system ensures its relevance and effectiveness. By using this system, businesses can gain a clear understanding of where each customer stands in terms of health and take the necessary steps to move them in the right direction.

    Category-Based:

    Category-based scoring focuses on specific customer behavior segments. This allows for a more detailed analysis within different areas of the business. The segmentation is created based on usage patterns, customer satisfaction, and support ticket activity. This approach helps identify specific areas for improvement and provides a holistic view of a user’s health levels. It is a great way for every organisation to gauge the overall health of their customer accounts and make data-driven decisions for long-term success.

    What is a Good Customer Health Score?

    Note that different organisations use different metrics to identify “good health score”. It depends on the factors you take and how you number the scorecard data. However, there is no single-size fits all approach in this methodology. While considering one consumer across various factors, you can keep a personalized scale for your business. For example, a number between 1-70 can indicate a healthy customer. A number from 69- 45 can indicate ‘at risk’ users. A number below 45 is an ‘unhealthy’ customer.

    The number of consumers in the ‘unhealthy’ range spend lesser to minimal over the ‘healthy’ consumer range.

    3 Ways to Have a Good Customer Health Score

    We have to look at marketing strategies from a customer’s point of view. A good customer experience across various journey maps will in-turn bring good health scores to the CX dashboard. Here are some strategies to apply:

    1. Capture specific customer health score metrics:

    Metrics such product usage, customer satisfaction, purchase decisions and upgrade frequency provide specific insights into customer health. Historical data and behavior analysis help create personalized retention initiatives. Implementing a scoring system to measure strategy effectiveness is a great way to improve customer health.

    2. Optimize the buyer journey for better health scores:

    Mapping and optimizing the buyer journey can enhance customer satisfaction and upgrade scoring points. Identify pain points in the journey and swiftly close feedback loops at every stage. Streamline the buyer journey to reduce friction and increase customer engagement. This leads to higher health scores and better retention rates. A well-designed buyer journey is a great way to ensure happy and healthy customers in the long term.

    3. Win/loss ratio analysis and actions for improvement:

    Analyzing win/loss ratios provides insights into sales and retention effectiveness. Identifying common reasons for wins or losses improves health scores. Take specific actions based on analysis to enhance satisfaction and retention rates. Continuously monitor ratios and adapt strategies to bring long-term success. Act on customer feedback and communicate with people who have shared their feedback. This will build a long term relationship. 

    Conclusion

    There are many ways to understand your customer’s pain points, certain requirements and capture their feedback. This can be done by collecting their feedback across various buyer journeys. The customer health score metrics is a part of a wider CX program. Customer experience depends on health scorecards to understand how to best serve unhappy consumers and retain happy consumers. To capture in-moment customer feedback, consider using Merren. Start creating a free online survey with our 14 day free plan today.