Originally published on inSided.com on January 31, 2022.
Welcome to another week of Burn the Churn! This week, we continue to build the foundation by looking into what you should factor in when choosing your health score model. Let’s go!
When it comes to choosing your customer health score model, know this:
Customer health scoring is unique to each industry, each company, and sometimes even to each customer. There’s no one-size-fits-all way to approach it.
But before you can measure your customers’ health, you need to know who they are. This will help you determine the correct metrics, weighting, and more.
When selecting the right customer health score model for your business, consider these key factors.
What factors influence a Customer Health Score?
A healthy startup customer looks very different from a healthy enterprise customer. So, of course, you can’t measure them by the same standards.
An enterprise company needs you to solve its enterprise-level problems. As a result, your measures of success should be specific to enterprises.
Projected customer outcomes in one industry, field, or vertical might be — and likely are — totally different from another. Thus, the industry is an important factor when building out your model.
Your product and its key features, as well as its usage by your customers, will majorly affect your customer health scoring. For many businesses, this will define some of the most important metrics incorporated into their model.
You’ll want to include, at minimum, the essential product-related metrics that indicate a healthy or at-risk customer. More on that below.
One company may need to predict the chance of a customer churning while another may want to predict the likelihood of a customer upselling. Different business models have different goals and thus distinct metrics of success.
When it comes to scoring customer health, companies use a variety of different systems, including:
- Traffic light (red, yellow, green) system
- Assigning points 0-100
- Determining rankings like A, B, C, or D
Whatever approach works best for you, the most critical part of any customer health score is the metrics you include.
Let’s take a look at some of the most essential metrics.
Key metrics to include in a Customer Health Score
There are many metrics you can choose from, but not every KPI is created equally.
When defining the metrics to incorporate into your customer health score, ask yourself: What does a happy customer look like for you?
Then, work backward.
A well-rounded customer health scoring methodology should include both quantitative and qualitative factors for maximum impact and effectiveness.
Here are some key metrics you’ll want to consider including in your customer health scoring.
Of course, how (and how much) customers use your product are major metrics of success you’ll want to include in your health score.
This might include:
- Depth of usage – i.e. number of users per customer, number of logins
- Breadth of usage – i.e. usage of selected key features, number of licenses
- Frequency of usage — i.e. time spent in the product
How your customer interacts with your product is huge in understanding how they’ll interact with your company.
Customer engagement is what drives adoption, revenue, and ultimately defines the customer experience. Engagement includes all interactions your customers have with:
- your employees,
- with other customers, or
- with your Customer Success content.
All of these elements are worth tracking in your health scores. Consider the following types of engagement:
Community is key in customer engagement and feedback. Are customers active in your customer community? And if so, how did they get there?
Take a look at key activities like visits, posts, topics, replies, new ideas, and more. (Need more community guidance? We’ve got you covered.)
Do they access your Knowledge Base? If so, how often are they engaging for support? Consider page views and interactions per visit.
Are they getting the fast and relevant answers they need? See likes and survey feedback.
Are customers proactively reaching out to you? Are they viewing and clicking? Take a look at email and monitor your in-app notifications, walkthrough requests, CTA clicks.
Are your customers consuming your content? See time spent on page, bounce rate, scroll depth, and content downloads.
Is your content perceived as valuable? Consider video views, drop-offs, and interactions, webinar signups, attendance, and drop-off rates.
Health score red flags and common pitfalls
When it comes to customer health scoring, here are a few common mistakes you’ll want to watch out for.
Too many metrics
Yes, you can have too many metrics.
Although you can choose to measure a bunch of different metrics in your health score calculation, that might be overwhelming and even unnecessary. It can also make weighting much more difficult and inaccurate.
In order to be strategically data-driven, you actually don’t need that many metrics. The most significant and predictive five metrics will likely tell you much more than 25 metrics pulled together at random.
As I mentioned, some metrics matter more than others. Not every piece of data or individual score for each metric is created equally.
The tricky part is assigning a balanced weighting scale to each data point. Imbalanced weighting can completely throw off your score.
This is highly unique to your company. Consider which metrics matter most to you by assessing past healthy and at-risk customers to see which are the most predictive of future success.
Product usage data in a vacuum
Yes, product usage data is critical. But your customer engagement is just as important and is necessary to temper the hard, cold product usage facts.
Look at your community engagement and talk with your CSMs to get a more holistic view of the customer and how they’re feeling.
Set it and forget it
The first time you build a health score, you’re making a hypothesis about what will accurately measure your customers’ health.
If health scores say one thing but customers are regularly doing another (e.g. green but churning, or red but expanding), the score is no longer useful.
You must regularly test the effectiveness of that hypothesis in accurately predicting churn and/or expansion, and iterate as necessary to improve accuracy.
Customer health scoring helps Customer Success teams reliably assess customer risk, avoid churn, improve retention, and create more upsell opportunities.
Every customer health scoring system is unique. As you start the process with your own calculations, consider what success means to your customers. This is the key to leveraging your scoring system to have the most impact on your business.
Ultimately, when used to maximum effect, the customer health score is a powerful tool that enables CSMs to maximize the customer experience and build better relationships with customers.
Looking create a single destination for your customers to connect, share best practices, provide feedback, and build a stronger relationship with your product? Schedule a demo to discover more.