How to Score Customer Health Image

How to Score Customer Health

Customer health scores play a critical role in the success of any company.

When you have strong customer health scores, your business thrives. Adoption increases, upsell opportunities present themselves more consistently, and customers advocate on your behalf, even when you don’t ask them. On the other hand, a bad customer health score can indicate churn is on the horizon, as well as poor customer stories, or worse. Depending on how bad the situation gets, dark days could be in store for your organization.

If your company is like most others, chances are you measure customer health using a three-color coding model: The customers that are healthiest are green, customers in the middle are yellow, and customers that aren’t so happy are red.

While such a system is certainly better than nothing, it leaves much to be desired.

Defining Customer Health Scores

For starters, not all greens are created equally. How do you know which ones are close to slipping into yellow? What’s more, this model is often inputted manually by team members, making the scale subjective. You can’t make data-driven decisions with a scale that changes based on who inputs the information.

Perhaps most critically, this approach makes it difficult to figure out why a customer has earned a certain score. The why is the foundation on which you build strategies, make operational decisions, and craft a plan for renewal. If you can’t understand the why quickly, not only will you miss opportunities, but you’ll burn a lot of human hours on a fruitless task.

The good news is that it’s possible to transform your organization’s approach to scoring customer health. You just need the right tools and the right approach.

A New Way to Measure Customer Health Scores

The right approach to measuring customer health will largely depend on your customer success organization, as well as the goals of your customers. However, the tools you need to create objective, actionable measurements of customer health are more universal.

You want to invest in tools that can comprehensively measure the health of your customer and update you in real time. Your Customer Success Managers need to know which tasks to prioritize, which customer relationships to focus on, and which opportunities to surface to the wider organization. A tool that only gives you high-level information, or worse, inconsistent information won’t do.

By investing in purpose-built tools designed specifically to help you measure customer health scores, it’s possible to automate the process while standardizing what’s meant by each grade a customer receives.

Creating a Customer Health Scorecard

Before you decide how to measure and create a customer health scorecard, you’ll need to answer some questions:

  • How quickly can customer health scores change (e.g., daily, weekly, monthly, or quarterly)?
  • What elements make up your customer health scores?
  • Is each of these elements equally important, or are they weighted differently?
  • Are these elements measured subjectively or objectively?

While it might be difficult to align your team around these answers, asking these questions is a very critical part of the process. To make it as easy as possible on your team, limit the number of people you include in this process so that you can narrow down your focus without hearing everyone’s input.

Customer Health Score Metrics

When it comes to measuring customer health, you might have unique metrics that are most valuable to you. If, however, you are looking for a place to start, here are the major metrics most organizations track:

  • Overall product usage
  • Depth and breadth of usage
  • Account growth
  • Number of renewals
  • Number of upsells
  • Length of customer engagement
  • Need for support
  • Survey results
  • Product feedback
  • Invoice history
  • Community involvement
  • Overall relationship

While this list is by no means exhaustive, it should get you thinking in the right direction.

As you begin putting the final touches on your plan, it’s important to keep the number of metrics you measure manageable. Ideally, you should be able to manage all of these manually if you had to; the last thing you want is to drown yourself in too much data, preventing you from extracting any meaningful insights from it.

Additional Customer Health Criteria to Consider

In addition to metrics, you’ll also have to determine whether to have multiple models for measuring customer health.

For example, you probably don’t want to use the same criteria to gauge the status of a customer you’ve onboarded and a loyal customer that’s been around for five years. Not only do these customers require different engagements from your organization, they also will present differing opportunities. Without context, your team could miss upsells, or major indicators that your health score is slipping. Similarly, you might want to measure customers that use your products and don’t engage with you much differently than customers that are constantly reaching out for support and feedback.

Whatever you end up doing, the value proposition here is tremendous. The more control you have over customer health scores, the easier it becomes for your Account Management and Customer Success teams to figure out how to deliver the most value to the organization. Standardizing and operationalizing these efforts will make it easier for you to predict renewals, grow your revenue, and inspire loyalty from your customer base.

Get Help Building Your Customer Health Strategies

While it might take a while to get your customer health scores in order, once you put in the work, your business will be in a much healthier position because of it.

And remember, with the right tools in place, staying on top of customer health is easier than ever before.

For more information on how your organization can streamline its customer health initiatives and avoid churn, check out How Gainsight Refined Their Customer Health Scorecards in the New Economic Climate.