Crafting an overall Customer Health Score that brings in Predictability

Who is this post for?

Customer Success Managers (CSM) and Leaders in a B2B SaaS company who are handling medium to high-touch customers.

Being a CSM, you might have faced the situation when you receive a call from your customer to inform you that they will not be renewing their contract. This news might come across to you as a shock, maybe because you were thinking that everything was going well.

While you rack your brain in an attempt to identify when and where things went wrong, it is too late and you have already lost the customer.

You also start to think about, how can you be confident that this will not happen again?

Is there any way to predict this in advance?

Yes, there is.

You can predict churn by calculating the Customer Health Score. If you set up the Customer Health parameters wisely, this score will help you not only predict churn but also act as a leading indicator of the overall health of the customers and your entire portfolio.

How to define Customer Health?

Now, the $1M question is, how to define these parameters?

Most people confuse health with Product Adoption. But along with Product Adoption, there are various dimensions to it.

Take the example of your own health. If someone has to understand my health…they not only have to consider my physical health but also my mental health, financial health, relationship health, etc.

The same goes for the Health of a Customer. We should consider other dimensions like Relationship, Service, Financial and Subjective opinions/External factors that will act as leading indicators.

Screenshot of how Health of an Account/Customer looks like in the CustomerSuccessBox software.

Here are some quantifiable metrics for all the mentioned dimensions along with a few examples that will help you configure the customer health score for your portfolio of customers:

Product Adoption Health:

1. Active Days: You should measure how frequently your product is being used.
2. Adoption of core-product features: The customer may not have to use all the features of your product. Just identify the core offering of the product and measure if the customer is using it.
3. License level Adoption: Track how many of the purchased licenses have been consumed. If unused, the customer may downgrade or stop using your product in their internal processes.
4. Product Stickiness: Check how well integrated your product is with the customer’s ecosystem. Have you completed all the integrations? Are you a part of their internal process?

Relationship Health:

1. Rapport: How good is your CSM’s rapport with the Decision Maker, Product Champion, Business users, Economic buyers? How is their relationship with the other departments and executives?
2. Frequency of communication: Do you have touchpoints with the customer every month or fortnight as per the pre-decided frequency?
3. Interaction with Customer: It’s important to keep track of your visits to the customer, Quarterly Business Reviews (QBRs), Zoom meetings, telephone calls you had, etc. These logs will help you determine if a customer is willing to talk to you and determine if they are getting value out of those conversations.

Service Health:

1. Support Tickets raised: How many support tickets have been raised?
2. Response to the tickets: Has your Support team resolved the critical support tickets on time?
3. Happiness Quotient: Is the customer happy with the response that they have received?

Financial Health:

1. Purchase History: What plan has the customer subscribed to?
2. Invoice Due: You should also keep a track if the invoice is overdue.
3. Upgrades/Downgrades: If the customer has upgraded/downgraded, purchased more licenses or canceled licenses.

External factors

We also have to factor in the subjective responses from the CSM.

1. Positive confidence tags: If the customer is driving a case study with you, if they have referred anyone, etc.
2. The Risk Tags: Your champion has left the company, any specific threat to the company, any feature without which customers may not be ready to go ahead.

You should think about all these dimensions and configure the definition of Good & Poor Health within your Customer Success Software.

If set right, these parameters act as a leading indicator of customer health.

Keep reviewing these results and keep tweaking your parameters as your product, customers and you grow

I would love to know how you set up account health in your organization and have set up the right health parameters that helped you to be proactive?

This blog is originally published on CutomerSuccessBox Blog posts.

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