Customer Health Score

What is Customer Health Score?

A customer health score is a quantitative measurement used by the Customer Success team, to assess the overall health and satisfaction of individual customers. It is an aggregated score that takes into account various performance and engagement metrics to provide a holistic view of a customer's relationship with the organization.

The purpose of a customer health score is to help Customer Success teams identify which customers are thriving and which ones may be at risk of churning or encountering challenges. By regularly tracking customer health scores, Customer Success teams can take proactive steps to retain and grow customer relationships, ultimately leading to improved customer satisfaction and business success.

How can we build a Customer Health Score?

Building a customer health score for Customer Success involves quantifying various aspects of a customer's engagement and relationship with your product or service to assess their overall health and likelihood of success. A well-designed customer health score can help Customer Success teams identify at-risk customers, prioritize their efforts, and proactively address potential issues. Here's a step-by-step guide to building a customer health score:

1.????Define Success Criteria: Start by defining what success means for your customers. Identify the key outcomes they aim to achieve with your product/service and the milestones that indicate they are on the right track.

2.????Identify Key Metrics: Determine the critical metrics that directly align with customer success criteria. These could be product adoption metrics, usage frequency, feature adoption, customer retention, customer satisfaction scores, NPS, or any other relevant data points.

3.????Weight the Metrics: Assign appropriate weights to each metric based on their importance in measuring customer health. Not all metrics carry the same significance, so consider the impact of each metric on overall customer success.

4.????Normalize Data: Normalize the data to bring the different metrics onto a comparable scale. This step is crucial when metrics have different units or ranges.

5.????Set Thresholds and Benchmarks: Establish thresholds or benchmarks for each metric to classify customers into different health segments, such as "Healthy," "At-risk," and "Critical."

6.????Gather Data and Calculate Scores: Continuously gather data for each customer and calculate their health scores using the weighted metrics and established thresholds. Customer Success teams can track these scores over time to monitor changes and trends.

7.????Segment Customers: Based on their health scores, segment customers into different categories. Each segment can have a specific set of actions or interventions that align with their current health status.

8.????Define Action Plans: Create action plans for each customer segment. Determine the appropriate actions or strategies to engage with customers in each segment and promote their success.

9.????Automate the Process: Automate the customer health score calculation and segmentation process as much as possible to ensure real-time monitoring and swift responses to any changes in customer health.

10.?Iterate and Improve: Regularly review the effectiveness of your customer health scoring system. Analyze customer outcomes and the success of your interventions. Iterate and refine the health score model as you gather more data and insights.

Metrics and Weights Used for Capturing Customer Health Score

The specific metrics used to calculate a customer health score can vary depending on the nature of the business, the product or service offered, and the goals of the Customer Success team. Some common metrics and their respective weightage that might be included in a customer health score are:

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1. Product Adoption and Usage: [Weight: 25%]

??- Number of Logins in the Last 30 Days: [Score out of 10]

??- Feature Adoption: [Score out of 10]

??- Usage Frequency: [Score out of 10]

2. Customer Satisfaction (CSAT) and Net Promoter Score (NPS): [Weight: 20%]

??- CSAT Score: [Score out of 10]

??- NPS Score: [Score out of 10]

?3. Churn Risk: [Weight: 20%]

??- Churn Probability (Predictive Model or Historical Data): [Score out of 10]

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4. Support Interactions: [Weight: 15%]

??- Number of Support Tickets in the Last 30 Days: [Score out of 10]

??- Complexity of Support Tickets: [Score out of 10]

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5. Onboarding Completion: [Weight: 10%]

??- Onboarding Completion Percentage: [Score out of 10]

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6. Customer Engagement: [Weight: 5%]

??- Engagement with Marketing Campaigns/Resources: [Score out of 10]

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7. Revenue and Customer Lifetime Value: [Weight: 5%]

??- Total Revenue from the Customer: [Score out of 10]

??- Customer Lifetime Value: [Score out of 10]

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Calculation:

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Customer Health Score =

??(Product Adoption and Usage * 0.25) +

??(CSAT and NPS * 0.20) +

??(Churn Risk * 0.20) +

??(Support Interactions * 0.15) +

??(Onboarding Completion * 0.10) +

??(Customer Engagement * 0.05) +

??(Revenue and Customer Lifetime Value * 0.05)

?Final Customer Health Score: [Total Score out of 100]

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Customer Health Status:

- 0-40: Critical - Requires immediate attention and intervention.

- 41-60: At-Risk - Needs proactive engagement and support to improve.

- 61-80: Healthy - Satisfied and engaged, but continuous monitoring is necessary.

- 81-100: Thriving - A highly successful and satisfied customer.

By calculating the customer health score using the above metrics, you can categorize customers based on their overall health and prioritize your Customer Success efforts accordingly. Keep in mind that the specific metrics, weights, and thresholds may vary depending on your business and customer success objectives, so feel free to customize the metrics and the respective weightage to best fit your needs.

Remember that the customer health score is not a static measurement but an evolving one. It needs to adapt to changes in your product, customer base, and business objectives. Regularly communicate the customer health score with the relevant teams to foster a customer-centric approach throughout the organization.