Customer Health Score metrics to accelerate your SaaS growth

Customer success
Suprej Venkat Jun 21, 2023

As a SaaS customer success team, your top priority is ensuring the success and satisfaction of your customers. But how can you measure and maintain their health throughout their journey with your product?

We are again in the loop of questions about how companies can gain insights and how to measure customer health?

  • analyzing existing customer base data
  • identifying those who are most loyal and those who are most at-risk.

By combining this data with the contributions of the Customer Success Manager, customer success metrics can accurately determine customer health, enabling companies to take proactive measures to improve customer relationships and satisfaction and promote retention.

But is it enough to quantify the monetary decisions of an organization?

In this blog, we’ll understand customer success metrics and Customer health metrics that are crucial for any company that wants to succeed in today’s competitive business environment.

But first, What is Customer Health Metric or Score

What is Customer Health Score?

A customer health score is a metric that assesses the overall satisfaction and health of your customer relationships. It is a key performance indicator (KPI) used to determine whether a customer account is “healthy” or “at risk” of churning. This score is derived from multiple data points that are combined into a single numeric value, making it a qualitative measure of “good,” “average,” or “poor.”

The calculation of customer health scores varies from one company to another. However, the ultimate goal is to create a reliable metric to help companies understand how their customers perceive their brand. A high customer health score indicates the customer is satisfied and more likely to renew their subscription and recommend the company to others.

An average score implies that the customer relationship is under strain, which puts the account at risk of churn. A low score indicates that the customer is unsatisfied, so the company must take corrective action to retain the account.

To calculate customer health scores, companies use a multidimensional customer health model that enables them to choose the KPIs to include, define the score ranges for each metric, and determine the weight of each category. This approach allows companies to align their customer health scoring system with their business priorities, providing insights into how specific factors affect their client relationships.

For instance, the Totango customer health score feature enables companies to set up broad account health measurement categories or drill down into multidimensional subcategories, depending on their business needs.

How Do You Calculate Customer Health Score?

Companies can choose which metrics to use based on their business goals and priorities and combine them into a comprehensive customer health score that accurately reflects the health of their customer relationships. Customer scoring systems typically incorporate a range of key performance indicators (KPIs) used to measure customer relationships’ health. Here are some of the most commonly used KPIs:

Net Promoter Score (NPS):

NPS is a KPI that measures how likely customers are to recommend a company to others. It is measured using a survey question that asks customers to rate their likelihood of recommending the company on a scale of 0-10.

Customer Lifetime Value (CLV):

CLV is a KPI that measures how much revenue a company can expect from a customer over their relationship. A high CLV indicates that customers are valuable to the company and are more likely to be satisfied.

Retention Rate:

Customer retention rate measures how many customers continue to use a company’s products or services over time. A high retention rate indicates that customers are satisfied and more likely to renew their subscriptions.

Product Usage:

Product usage measures how often and extensively customers use a company’s products or services. High product usage indicates that customers are satisfied and find value in the product.

Support Tickets:

This KPI measures how many support tickets a company receives from customers. Many support tickets can indicate that customers are experiencing issues with the product or service, which could affect their satisfaction and health.

Churn Rate:

Churn rate is a KPI that measures how many customers leave a company’s product or service over a specific period. A high churn rate indicates that customers are dissatisfied and may be at risk of leaving for a competitor.

Customer Satisfaction Score:

Customer satisfaction score measures customers’ satisfaction with a company’s products or services. It can be measured using surveys, ratings, or reviews.

What Does Customer Health Score Indicate?

A customer health score is a crucial performance indicator that assesses the health of a company’s customer relationships. A numerical value typically represents the score and can provide valuable insights into customer satisfaction levels, potential churn risks, and opportunities for growth.

1. In a three-tiered system, a score of 75-100 indicates that the customer is thriving and satisfied with the product or service. This presents an opportunity for companies to engage in value-adding activities, such as upselling or inviting referrals.

2. A score of 50-74 suggests that the customer’s satisfaction level varies across different metrics. In such cases, companies should take steps to enhance the customer experience, such as sending reminders or tutorial tips based on customer activity.

3. A score of 0-49 signifies that the customer is dissatisfied and at risk of churn. In such cases, proactive measures, such as a customer health check, may help promote retention.

By tracking customer health scores, companies can identify opportunities to increase revenue by engaging with satisfied customers through upselling and referral offers. They can also proactively address churn risks by intervening to promote retention. Furthermore, tracking customer health scores can aid in predicting retention and churn rates and identifying issues affecting customer health. Allowing corrective steps to optimize the customer journey.

Best Practices to Improve Customer Health Score

Improving your customer health score starts with identifying the key attributes that should be included in your scorecard. To do this,

1. Consider the data sources available to your business, and evaluate if they provide actionable insights that are relevant to your individual accounts or customer segments. If necessary, integrate new data sources through web tracking, surveys, and feedback forms.

2. It’s important to keep it up to date by regularly incorporating new customer analytics data and collaborating with cross-functional partners.You can also initiate action by defining scenarios that will notify relevant teams about the need for corrective actions and suggest actions to take.

3. You can bucket signals into different groups based on your accounts’ life cycle stage, desired outcome, or purchase plan.

Experience the full potential of Churn360 through a personalized demo session with our expert team

Book a demo

4. Using consistent methodology will enable you to compare and analyze results over time and identify areas for improvement.

By following these best practices, you can ensure that your customer health score accurately reflects your customers’ state and provides meaningful insights for your business.

Revamp Your Retention Strategy with Customer Health Scores: A Color-Coded Solution

The customer health score simplifies the complexity of interpreting essential customer satisfaction KPIs. This innovative metric system clearly indicates which customers are likely to renew and which are at risk of churn, allowing you to take proactive measures to extend offers to satisfied buyers and intervene with at-risk customers.

To enhance customer health scores, leverage technology to automate best practices for clients in different health score categories.

Churn360’s customer success platform has automated workflows and built-in KPIs, empowering you to monitor and optimize customer health scores easily. Start for free today to see how Churn360 can help you cultivate strong customer relationships and drive revenue growth.

Take the first step today!

See how Churn360 can help retain your customers

shape square
shape circle