Customer health score will indicate when a customer will fall off the customer retention scale. It defines the “health” of a buyer in the business ecosystem. In simple words, marketers can detect if a user is willing to stay or leave your brand in a time frame. Businesses can detect potential communication gaps and upselling opportunities when they measure the health score metrics.

What does Customer Health Score mean?

A customer health score metric is typically used by SaaS companies to identify users who might churn or stay. This measurement is very specific to the product and service offerings of a company. It determines the relation of the company to its user base, the experiences it provides and detects need gaps etc. Unlike other metrics, the customer health score does not have a pre-defined formula. The scores depend on your product, calculations and metrics a brand is willing to consider.

The 4 Impact of Customer Health Scores on Business

Tracking the customer health score identifies improvement areas within business operations and sets the next steps for enhancing customer experience. Using customer data to calculate the overall score is the best way to gauge long-term success.

Identify usage patterns:

Identifying patterns involves analyzing customer behavior to proactively address concerns and prevent churn. SaaS companies mostly create adjustments and upgrades based on customer feedback and market conditions. They release specific features based on customer needs and data. To capture this data, proactively launch customer feedback surveys across platforms where your user base engages the most. This could be via emails, website chat bots or on across your social media platforms.

Reducing Churn:

Proactively reaching out to at-risk customers by means of satisfaction surveys. This will enable teams to close feedback loops, identify usage problems and future plans with your product/service. In this manner, you can prioritize resources, address usage concerns and improve customer retention. Pin point on their pain points, capture grievances, their learning curve and interactions with new product upgrades.

Recognizing your top customers:

Identifying high-value customers through health scoring and double down the effort to retain them. Tracking and measuring customer health scores over time provides insights for long-term customer relationship management. This single score helps recognize top customers/ buyers, guiding businesses on the best way to focus on their most valuable assets.

CX-centric improvement:

Businesses agree that if they focus on improving their products and services (especially in a SaaS industry setting), they can see an uptick in business. Additionally, a large focus on customer experience CX can pull in new customers and retain patrons. When you identify health scores of an existing user base, the marketing department can focus on bringing a fresh approach for higher retention rates. The customer health scorecard is an important element of improving CX.

Important Customer Health Score Metrics to Consider

This metric can change and vary from industry to industry. However, the retention metric is valuable for account managers and customer success managers. It lets you know if a customer is at the risk of churn, their current pain points and how high that risk is.

Here are some general customer health scoring metrics to consider:

• Product usage
• Product upgrades
• Number of renewals and upsells
• Timeline of customer engagement
• Customer satisfaction metrics
• Product feedback
• Website activity and engagement
• Need and number of times for customer support
• Community participation
• Maximum value of purchase on the invoices

Keep the metrics manageable and utilize the right tools to assess customer data to propel your business in the right direction.

However, avoid putting everyone in the same metrics. A customer who might not be too interactive with the community could have been a loyal buyer. While every individual user may not fit every single metric, the customer success team might miss on the details, upselling or cross-selling opportunities. Every single person might have their own engagement levels.

4 Things to Remember About the Customer Health Score System

Maintain an individualized customer health scorecard

Create a scoring system that your organisation can use and adhere to. If a new customer uses your product but leaves a negative review, you can add or deduct points from their interaction with your products/services. Identify a score that can summarize the entire satisfaction metrics without complications. In a SaaS business, if customers are happy, allocate a positive score. If the users are dissatisfied or are moving towards a competitor product, their score should get the customer service team spring into action.

Create your own benchmark using historical data

Create your own metrics of healthy customers versus people who are at a high risk of churn. It is okay to experiment on a sample customer base before you utilize this metric on a global scale. Segment each user base into numerical groups. You can colour code the segments and allocate actionable items depending on the overall customer health score. Example if a customer falls below 40% of the overall score, it is time to identify the need gap and address their burning issues.

Create your own survey metrics and data sets

To capture customer feedback, marketers can use pre-designed survey templates to get a higher response rate. You can capture these metrics using omnichannel platforms- places where people are usually the most active. Marketers can plot these metrics across graphs and bar charts and collect open ended responses. Includes customer satisfaction metrics of net promoter score, CSAT and CES scores. Set up in-moment data collection metrics can save a company from losing a valuable client.

Create custom made scales and charts

When you finalize on a useful way to track health score, you can implement the scorecard globally across the organisation. This can be in the form of a ranking scale or alphabetical scorecard. Ranking scale can demote promoters or detractors with relation to their health scores. Keep a track of their past interaction with your product and services. If a score falls, it is time to investigate the drop. If a score is stagnant, the user might be a passive who may or may not convert to being a loyal customer. A higher score denotes a happy user. 

Improve CX with Customer Health Score but Don’t Take it for Granted

Every organisation needs a well maintained customer health score metrics. However, if the user base is happy and loyal, don’t take it for granted. However, one still needs to maintain a long-term relationship with their user base. Organisations understand that it is less expensive to invest in an existing customer than to seek out new customers. Departments can still focus on improving customer experience across the user journey and offer timely assistance to maintain the relationship. 

Should a company use an automated system to calculate customer health scores or rely on human judgement?

A company should use a combination of both automated systems and human judgement to calculate customer health scores. Automated systems can provide data-driven insights quickly and efficiently. Using human judgement can add context and subjective analysis that may not be captured by the automated system alone.

Conclusion

Build a standard metric for your company that can help you identify if churn is inevitable. The customer health score requires goal oriented questions and an action oriented service team. Identify the list of factors that indicate a good customer-business relationship. Assign numeric values on each of these factors and add them up. The final values will determine a promoter or an “at risk” customer. Gauge customer behavior and map user journeys across touchpoints and milestones. Keep a tab on account management and use the right tools to supercharge your business ahead.