Creating a customer health score

A customer health score allows Customer Success teams to track their home runs, walks, and strikes

A customer calls out of the blue to let your Customer Success team know they will not be renewing their contract. This news completely blindsides the Customer Success Manager (CSM) assigned to their account. While the CSM racks their brain in an attempt to identify when and where things went wrong, their manager wonders how can we be confident this will not happen again? Establishing a customer health score allows CSMs to identify at-risk accounts before they churn, as well as highlight which accounts are hitting key metrics known to increase the value their product provides. A customer health score (CHS) often includes smaller metrics that might not tell the whole story of an account in isolation, but when properly weighted and aggregated, can provide powerful insights into the overall health of a customer.

Metrics your customer health score should incorporate

A customer health score should incorporate metrics that are important to your customers, product, and company. Include attributes you know result in a successful customer, or conversely, a customer at risk of churning. For instance, if customers who integrate with your reporting API rarely churn, your score should have a data point that accounts for how invested a customer is in the product. There are also metrics outside of the product that have a huge impact on the strength of your partnership, such as the strength of your relationships with key stakeholders.

A customer health score should be comprised of metrics that are important to your customers, product, and company.

Still not sure where to get started? Below are a few examples of metrics you might want to track (scroll to the bottom of this post for a downloadable list):

Product Usage

  • Usage frequency (how often does this customer use your product?)
  • Key feature adoption (are they using your core or differentiating features?)
  • “Stickiness” of product (how deeply integrated is your solution and how hard would it be for them to transition to another product?)
  • User skill level (is the majority of their team able to effectively use your product at something above a “basic” level?)

Intercom has a great blog post that dives into how to determine which metrics matter most for your product, as does this article from Tomasz Tunguz discussing “proxy metrics”.

Customer Satisfaction

  • Product satisfaction (have they complained about bugs, site downtime, or key features they would like to see built?)
  • Volume of Support requests (how many times did they contact your Support team in the past month- be careful, reaching out to Support might not be a bad thing)
  • NPS (if your team is not already using NPS, read this article to get a quick overview of the pros and cons of this feedback system)
  • Level of advocacy (are they acting as a reference or recommending your product to their network?)
  • Prevalence of “administrative” hurdles (are they paying their bills on time?)

Relationships

  • Strength of executive relationship (have you maintained a line of communication with the key sponsor established during the sales process?)
  • Strength of relationship with Customer Success point of contact (what kind of rapport do you have with your day to day contact?)
  • Quality of relationships across customer’s organization (do you have good contacts across teams and departments?)

Plug your data into a Customer Success product

Once you have identified a few metrics you want to track (start small by tracking no more than 6), it’s time to enter this data into a Customer Success product that will calculate your customer health score. This can be as simple as an Excel spreadsheet or as sophisticated as a purpose-built Customer Success product. Integrating with a Customer Success product that has access to real-time data means your scores will never grow “stale” and will allow you to set up proactive alerts when scores adjust. A shortlist of products that will allow you to track a more complex CHS include Gainsight, Totango, Natero, and Amity. Customer Success can also choose to co-op a data analytics tool, such as Looker, into a Customer Success tool and create dashboards such as a CHS. The benefit of this approach is that it doesn’t require additional Engineering or Product resources to set up and manage. I’m also a huge advocate of starting small- consider building a POC spreadsheet before investing thousands of dollars in a Customer Success product.

Choose a scoring method

No matter what tool you’re using, there are two ways to incorporate the metrics above into a CHS scoring method. Option #1: Give each item a score from 1–10. Option #2: Weight metrics based on how important they are in determining client success. For instance, if usage frequency is a key factor in the health of an account, weight that metric at 1.25 so that it has a bigger impact on the overall score. If “administrative” hurdles are less concerning, weight that data at .85, and so on.

When the health of an account is measured regularly the Customer Success team understands how the value a customer is receiving from their product changes over time.

Review the results

After deciding which scoring method to use, establish benchmarks for what an acceptable customer health score looks like. Make sure to gut check the output of your CHS against what your team knows to be successful and struggling accounts. When the health of an account is measured regularly the Customer Success team understands how the value a customer is receiving from their product changes over time. Review the customer health score of customers who churn and see if their score tells the story of their declining success. Their feedback can also highlight to improve your CHS to better predict future churn. Grouping customers by their CHS allows Customer Success teams to be proactively engage with customers to increase value and adoption- and lower net churn at scale. And of course, continue to tweak your customer health score to ensure it’s useful to your Customer Success team and remains in sync with any major changes in your business.