Customer health score is one of the fastest and easiest ways to assess whether your SaaS customers are satisfied with your product and brand. Knowing this can help you evaluate churn risk and spot opportunities, empowering you to take appropriate action.
Here we’ll cover what you need to know about customer health scores. We’ll define customer health score, what metrics go into it, and what it tells you about customer accounts. Then we’ll lay out some steps you can take to improve customer health scores.
What Is Customer Health Score?
Customer health score is a customer satisfaction key performance indicator (KPI) designed to determine whether your customer relationship is “healthy” or “at-risk.” The customer health score simplifies data from multiple data points by combining them into a single metric represented by a numeric score. The scoring system and data points used to calculate this metric will vary from company to company, but in general, the goal is to create a qualitative measure such as “good,” “average,” or “poor.” A good result indicates that the customer relationship is going well, making the client more likely to renew their subscription and recommend others. An average result indicates that the customer relationship is strained, placing the account at risk of churn. A poor result falls somewhere between indicating that the customer is satisfied but not wildly enthusiastic and could be lured away by competitors unless steps are taken to nurture the account.
There are different approaches to scoring customer health. The best approach is a multidimensional customer health model. This allows you to select which KPIs to include, define which scores fall into each metric’s “poor” and “good” range, and determine how much weight to give each category. This multidimensional approach allows you to align your customer health scoring system with your business priorities, giving you greater practical insight into how specific factors affect your client relationships. The Totango customer health score feature allows you to set up broad account health measurement categories or drill down into multidimensional subcategories, depending on your business needs.
Common Customer Health Metrics
How do you calculate client health scores? Different customer health metrics can be selected and combined to create a customer health index. Some of the most common KPIs incorporated into customer scoring systems include:
- Engagement: What was the customer’s last touchpoint with your product?
- Usage: How often do customers use their accounts, what features do they use, and how long per session?
- Adoption: How many licensed accounts sold are actually being used? How many account users have been active in the last 30 days?
- Support: How many support tickets are being opened, how long does it take customers to get responses, and what outcomes are they experiencing?
- Customer satisfaction: What kind of feedback are customers giving through metrics such as NPS and CSAT survey scores?
- Customer sentiment: How do customers feel when interacting with your brand and product?
- Customer success outcomes: Are customers receiving the business results they hoped to gain from using your product?
- Financial and billing metrics: How often has the customer been overdue on invoices?
These are some of the most frequently used KPIs selected for customer health scoring, but other metrics and combinations are possible. Totango’s platform lets you choose the KPIs that matter most to your business.
What Does Customer Health Score Tell You?
What does a high or low customer health score indicate?
- 75-100 = Doing Well: The customer’s health indicators rank high, indicating satisfaction. You should consider pursuing value-adding engagements, such as offering upsells or inviting referrals.
- 50-74 = Take Notice: The customer meets some criteria for high satisfaction but does not rank equally high in all categories. To ensure continuing engagement, you should initiate actions to add value, such as sending reminders or tutorial tips based on customer activity.
- 0-49 = Requires Attention: The customer falls below acceptable standards in at least some health criteria and is at risk of churn. To promote retention, initiate steps such as reaching out with a customer health check.
If you’re using a multidimensional customer health model, drilling down into specific criteria may yield additional information. For example, you may find that one account has a low score primarily because of low engagement, while another has support issues.
Tracking customer health scores in this way yields several benefits:
- Highlighting opportunities to increase revenue by reaching out to satisfied customers with upselling and referral offers
- Flagging customers at risk of churn so you can intervene to promote retention
- Enabling you to predict retention and churn rates better
- Helping you predict expansion
- Allowing you to identify issues affecting customer health so you can take corrective steps to optimize your customer journey
These benefits make customer health scores an extremely valuable tool for increasing customer retention and revenue.
How to Improve Customer Health Score
Monitoring customer health score helps you track, manage and improve client relations. There are several steps you can take to manage your customer’s health. These include:
- Creating a customer journey map as a framework for managing customer health
- Planning best practices to promote health for customers at each stage of their customer journey
- Establishing KPIs that link customer health to business outcomes at each stage of the customer journey
- Developing a customized multidimensional health score model to focus on the KPIs most relevant to your customers’ health
- Adopting a customer success platform to automate your best practices and track KPI performance
The Totango customer success platform is designed to make it easy for you to implement these steps. Modules called SuccessBLOCs provide automated and manual workflows and KPIs designed to help you implement best practices for promoting client health throughout the customer journey. You can select from default account health settings or create your own multidimensional health scoring system based on metrics, score ranges, and weighting that you choose.
Use Customer Health Score to Reduce Churn and Raise Retention
By using a simple color-coding system, the customer health score provides you with a combined metric you can use to interpret other essential customer satisfaction KPIs. This tells you which customers are likely to renew and which are at risk of churn, enabling you to intervene with at-risk customers and extend offers to satisfied buyers. To improve customer health scores, you can use technology to automate best practices for clients in different health score categories.
Totango’s customer success platform includes built-in KPIs and automated workflows designed to help you track and optimize customer health scores. Get started for free today to see how Totango can help you nurture healthy customer relationships and vibrant revenue growth.
