It is an index made up of indicators that gives you an overall idea of how healthy a customer’s relationship with your product is. When used correctly at different stages of the customer journey such as onboarding or implementation or even after go-live, It can help predict the likelihood of a customer churning or staying on and growing.
Why it matters
A customer health score can help CS teams move beyond instincts and make handoffs easier.
When used early during the onboarding phase, it acts as an early warning system and helps support teams work better.
How to calculate the Customer Health Score
Since health indicators vary across projects, products, and customers, there isn’t an existing formula or industry standard for it yet. Start with identifying 4-6 indicators for the score and combine them based on weightage.
Here are some best practices for you to consider:
- Identify the most relevant metrics to use in your customer health score. Here is a non-exhaustive list of ideas to get you started:
- Onboarding/implementation progress: depth (percentage of onboarding completed in X time),breadth (percentage of users onboarded in X time)
- Product usage: overall product usage, depth of usage (eg: percentage of features used), breadth of usage (eg: percentage of overall licenses/users)
- Account growth (Dollar amount or license_ Growth of the account (could be $$ or licenses)
- Number of renewals/up-sells/down-sells/cross-sells
- Customer satisfaction survey results
- Number of escalations
- Number of support requests
- Product feedback
- Length of time between the end of onboarding and first cross-sell/up-sell
- Relationship with the customer: Relationship with the executive team/sponsor and the overall relationship
- After you’ve shortlisted the metrics, take some time to collect data and test combinations that best come together to accurately describe the existing condition of a customer account.
When possible, design your health score after assigning the right weightage to each contributing metric based on the nature of your product/service.
- Only after you have considerable data with different kinds of customers, categorize your health scores.
- Visualize the customer health score so that your CS team can easily understand the health of an individual customer or account.
