As any good doctor knows, monitoring your health is important. People don’t go to the doctor only when sick but also for occasional checkups.
Apply this principle to your business and you will build a healthy relationship with your customers.
Talking about customer relationships, one effective method of having a healthy relationship is using a customer health score – a metric used to determine whether customers are healthy or at risk.
Knowing your customer’s health score can help you identify bottlenecks in your customer experience and opportunities to make it better.
What Does a Customer Health Score Tell You?
Customer health extends beyond product adoption alone. There are several aspects to think of when assessing the overall health of your customers beyond their use of your product.
When dealing with a customer using a health score, you must evaluate their success at each onboarding, retention, and upselling stage. Customer health score metrics help you determine your customers’ success and how best to engage with their accounts to ensure they succeed in their jobs using your product.
Managing customer relationships can be complex, but it becomes more manageable when you base your decisions on factual data. In a world where comprehensive metrics are possible, relying on intuition alone is pointless for customer success teams. With the right system, you can use scores to allocate resources and make informed decisions.
It is important to understand the signals your customer health score communicates to determine the precise level of engagement, which encompasses the entire ecosystem, including support, adoption, and reporting, not just customer-product communication.
With a good customer health metric, you can know the following;
- The health of your customer base: A customer health score is a measure of the overall health of your customer base. The score gives you insight on customer engagement, satisfaction and retention.
- Areas that need improvement: By tracking your customer health score over time, you can identify areas that need improvement. If your customer satisfaction ratings are low, it may indicate that you need to improve your product or customer service.
- Churn rate: A low customer health score can also indicate a high churn rate. If your customers are not engaged, satisfied, or loyal, they are more likely to switch to a competitor. You can identify at-risk customers and take proactive steps to retain them by tracking their health scores.
- Customer lifetime value: A high customer health score can indicate a high customer lifetime value. Happy, loyal customers are more likely to continue doing business with you, recommend you to others, and even purchase more from you. By tracking your customer health score, you can identify these high-value customers and prioritize your efforts to retain them.
How to Measure Customer Health Score
Although customer frequency, depth, and breadth can provide a broad sense of your customer’s overall health, more specific data points are required to establish an accurate scoring system.
There are various ways to determine a customer’s health score, and your company must develop a system that aligns with your products and distinct customer base. Nonetheless, there’s a particular process that all companies must follow to create a functional system. By adhering to these steps, you can effectively measure customer health throughout your business.
Determine the factors to measure.
While there are countless metrics that you could potentially use to determine your scores, using too many variables will result in a scoring system that is too cumbersome.
Pinpoint the factors important to the health of your customer base, such as customer engagement, satisfaction, and loyalty. These factors may vary, so take some time to consider what is most relevant to your company.
Selecting only a few key metrics that, when combined, will provide a comprehensive score is preferable.
Create a distribution of every individual health score.
To develop an organized system, each metric must be calculated consistently. This necessitates using a customer health score tool and measurement scale that can be effortlessly applied to each metric.
Assign weights to each health score.
Once you have defined your metrics, you must assign weights to each to reflect their relative importance. A faulty weight system can give you the wrong results, leading to changes in your customer success strategy. For example, customer satisfaction ratings may be more critical than product usage frequency. The weights assigned to each metric should reflect their importance to your business goals.
Best Practices for Creating a Perfect Customer Health Score
A perfect customer health score should reflect the overall health of the customer relationship and be based on a combination of leading and lagging indicators. Here are some best practices and strategies for creating a perfect customer health score:
1. Monitoring the right metrics
There are no set structures for measuring customer health scores; therefore, defining and monitoring the right metrics is important. Mixing support signals with product adoption signals can lead to misleading scores that do not reflect the true health of the customer.
If you try to measure every variable, it will slow down the process. Taking a maximalist approach to measurement will consume more time, leaving less time to act on valuable insights.
However, a straightforward approach with a few variables will provide an accurate enough understanding of your customer’s health. You can use this information to concentrate on modifying your customer success strategy.
2. Take Action
The top-performing SaaS companies don’t allow critical customer data to accumulate and become irrelevant. Instead, they take action and utilize new insights to enhance their techniques. If your customer engagement levels are unsatisfactory, explore techniques to increase your products’ appeal, such as responding faster to customer support tickets or exceeding customers’ expectations. Investing the time to act on your data will yield immediate benefits, enabling you to achieve your goals and enhance the customer experience.
3. Create a better internal communication strategy.
Communication is key in any business. Everyone in the company must have the same perception to create a perfect customer health score. Customer success depends on the collaborative efforts of various teams. This can be achieved through regular meetings, training sessions, and updates on the health score and any changes to the risk strategy.
Effective internal communication involves:
- Sharing customer feedback and insights across teams.
- Providing regular updates on the health score.
- Establishing clear escalation paths for customer issues.
- With a culture of open communication and collaboration, you can quickly identify and address issues that may impact customer satisfaction.
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4. Correct the Course
Keeping track of customer satisfaction should be an ongoing activity. Throughout every phase of their relationship with your company, from initial onboarding and product adoption to subsequent renewals, pay close attention to their experience. Observe any changes in satisfaction levels resulting from modifications to your approach. Analyze the impact of introducing automation in your customer service department on customer behavior. Evaluate how minor product changes influence customer engagement so you can make informed decisions that boost your customer base and increase their satisfaction.
While marketing is not an exact science, having data to support your efforts is always beneficial. The importance of customer health in any customer success strategy is evident. Your customers’ success is directly linked to the longevity of your business, which is contingent on your ability to solve their problems.
Developing a customer health scoring system lets you understand how customers respond to your products. Rather than relying on a vague sense that things are going well, you can use actual figures to validate or refute your hypothesis.