How can you track how well customers are engaging with your SaaS product? By using health scores, of course. If you use customer success software like Churn360, you will have access to the data that tells you how healthy your customers are and be able to gain insight into whether you need to take action to prevent churn. Health score takes into account a number of factors which you can define to reflect your particular customers.
When SaaS companies are relying on subscription revenue, you need a way to measure how likely a customer is to renew with your business. When building long-term relationships with your customers, it’s important to keep track of their health so you can proactively prevent churn.
SaaS businesses need to know that there are several factors that affect the health score and customer success teams will need to be mindful of them. Gaining a true picture of health score for your customers is essential for those who want to retain their subscription customer base.
The Factors That Affect the Health Score
Company size
Enterprise customers should be analyzed differently compared to startup customers, for example. Their specific goals and needs for the product are likely to vary depending on the size of the company which then affects overall health score.
Industry
Customers based in different industries will also have varying needs for your product, which will in turn influence health score. Customers based in the oil and gas industry will use your product very differently compared to this in education, for example.
Product plans
Depending on which pricing tier your customers are signed up to, there may be great variation in how they use your product. Reaching usage limits on one tier may indicate they are ripe for an upsell, and will affect health score accordingly.
Workload
There are some times during the work period that customers will use your product more or less depending on their workload. If a project is paused, for example, they may stop using your product which could result in a negative health score, when in reality that customer is not actually at risk of churn.
Different Types of Mistakes That Can Affect the Health Score of a SaaS Company
They suffer from a poor onboarding process
Health score is always going to be damaged if you don’t have an effective onboarding process. Laying the foundations of customer health happens during the onboarding phase, where customers find out how your company will treat them after the sale. For SaaS companies, you must start trying to build the relationship right away.
Companies fail to act until churn is critical
Tracking health scores is no good if you fail to take appropriate action when you identify customers who are at risk. This can happen if you don’t measure health score regularly and too much time elapses between each scoring.
They don’t use the proper tools
A big mistake that CSMs can make is trying to calculate health score manually. Sensible teams adopt specialized customer success tools like Churn360 to help them keep track of every customer using a customizable algorithm.
They don’t factor in customer segments
Not every customer is best represented by the same health score. If you use the proper customer success software like Churn360, you will be able to define different health scores across different customer segments so you can treat every customer with the personalization they need.
They fail to identify key metrics for success
If you don’t know what health score means to your business, you won’t be able to gain proper insight into when customers are at risk. Key metrics such as renewal date and number of logins are just two examples of metrics that may indicate possible churn.
Tips and Tricks for Avoiding Mistakes That Can Affect the Health Score of a SaaS Company
Leave a sensible amount of time between measurements
You don’t want to measure your health score too regularly or the results will fail to be meaningful. Allowing enough time to elapse between each health score measurement means you will enable customers to have a chance to use your product and gain more accuracy in your predictions for churn.
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Adopt a tool like Churn360 to calculate health score for you
Imagine how much time your CSMs will be wasting if they are manually calculating health score for each customer. Churn360 has been explicitly designed to bring together many sources of data to build a true picture of the risk of customer churn. In Churn360, you can decide for yourself at what point a health score indicates an at-risk customer, and apply multiple health scores to your customer base.
Apply different health scores to different customer segments for higher accuracy
Not every customer is alike, and a low health score for one type of customer will actually indicate good health for another. That’s why it’s so important to create customer segments with their own tailored health score, which you can accomplish easily with Churn360. You can weight the data points for your health score depending on how critical each one is for overall calculation.
Conclusion
Measuring health score is essential if you want to effectively retain customers and prevent churn. Health score comes in useful because you can measure the health of customers over time, and take action if health score starts to full. It’s important to regularly revise how you measure health score to ensure that it remains a true reflection of the state of your customers. If you take action before it is too late, you can save more customers from canceling their subscription. Health score is a standardized way to measure customer engagement and find out just how loyal customers are to your business. Continued growth becomes more of a sure thing when you keep track of customer health score.
