A Guide To Customer Health Score to increase your retention
Due to this gap, businesses tend to overlook the aspect of focusing on customer success health, leading to an increase in churn rate. Gaining customers can be easy but retaining and satisfying them is not a feast.
As customers keep using your product, there are specific actions known as signals for businesses. However, it is challenging to pay attention to every critical signal in a growing company.
This is the focal point where you need to think about your customer’s health and ensure that nothing is overlooked.
In this article, we will take you through the concept of customer health score and its other critical elements. It’ll help you create a good customer health score and maintain it.
What’s a customer success health score?
The customer health score is an essential metric that predicts a customer’s probability of churning or continuing to use the product. The purpose of this metric is to provide information about the situation of your customer accounts soon enough.
It works on a scorecard model and is simple to understand. When it shows the customer in green, it means the customer is getting more value, engaging effectively, and continuing to make similar efforts.
However, when a customer is marked red, it needs your immediate attention. The customer is not getting value from the product as expected, or they are not engaging with it anymore.
The customer health score is a great early warning system, and it can measure almost all of the necessary interactions with your customer while determining the score. The most common among those categories are:
- Value
When someone signs up for the product, they want to solve one of their problems, and you can track it to know if they are getting that value out of it.
- Product Adoption
For SaaS businesses, the matter of product usage and adoption is crucial as compared to others. It’s a metric not to be ignored, and a customer health score helps you track the product usage along with its volume and depth. If you want to know more about product adoption, we have written an in-depth article covering every possible aspect.
- Customer Satisfaction
All of your efforts drill down to a single purpose, customer satisfaction. With the help of customer health score you can receive feedback from customers as CSAT, and satisfaction scores, and take the sentiment of the customer success manager into account.
Why do you need to calculate customer health score?
Customer health is a broad term and not limited to product adoption or usage. There are other factors and components in the overall customer health.
The process of dealing with a customer begins with onboarding. After onboarding, there are various stages such as conversion to paid user, retention, and upselling.
You need something that notifies you about the situation and gauges the waters for you at every such stage. Customer health score helps you evaluate the success of each and every customer at every stage. As you assess their pain points, you’ll have the insights required for delivering impeccable service.
When your customers get what they want and excellent service, they refer you to others. The more you personalize your service according to them, the more likely you will catalyze referrals.
And we all know those customer referrals are powerful, even more so when you’re selling an expensive product that needs a long-term commitment.
Customer health scoring is a key element in providing that stellar service. Once you have your data and systems, you can address each customer with personalized messages and help. That will lead to less customer churn, fast acquisition, and more customer retention.
How to measure the customer health score?
Customer health scores are unique to every business and, in some cases, customers too. So there is no universal rule to measure them. However, we have a few points to help you get started.
- Create your personas
Before you think about predicting customers’ behavior, you need to define your customers. Defining your buyer personas will help you with segmentation.
Most businesses mistake tracking a premium metric for a beginner plan user, which calls for tracking different metrics for each customer.
Once you figure out the customer personas and the different segments for your users, it’s time that you decide on which metrics to use.
You can track many metrics to understand your customer’s health. However, it doesn’t mean you need to track every metric. Because implementing too many metrics won’t mean success and good customer health.
Even if you sit down and select a handful of metrics to start, there are chances that you won’t need the other 30 metrics. The concept of choosing those handful metrics is something to talk more about.
Before you choose specific metrics for your business, here are a few things you must consider:
- The interaction of the customer with your product. How much time do they spend using your product?
- Out of all the features you have in your product, how many are in use?
- How many active users are there?
- How is the experience of users?
It also depends on your industry, target audience, company size, and how far they are in the customer journey. You need to find the answer to these questions:
- What is the experience of the customers?
- How can you improve it, so they don’t churn?
- Distinguishing metrics and real-time data
Having a health score means you want to find what action leads to a good or bad outcome. However, relying solely on metrics can lead you to some confusion.
For example, with a health score, you want to track the time a user is spending with your product. And you must believe—the more time someone spends, the more they like it.
However, this can be an illusion too. If someone is spending a lot of time with your product, they may just can be confused or struggling with the product. It’s great if a person is spending less time with your product but consistently, rather than someone that’s using the product once a week.
As you can see, this particular part needs more testing and experiment to figure out the ideal way for your business. Successeve can help you with that heavy burden.
Successeve Retain & Expand for customer success teams helps you create a health score and track the health status of your customers with multi-dimensional information like revenue data, product usage, support tickets, and a lot more.
So if there is a customer in bad health, it will immediately show red color with a sign to focus on that customer. Also, it will notify you of the signs that a person is showing concerning bad health.
And because data can only take us so far, CSM can manually influence the health score according to their own gut feeling, we call it the Pulse.
- Create a system for scoring
A health score needs a system or set guidelines to work on. For example, if a customer consecutively checks out your pricing page for three days and submits a query, you can add five points to their customer account.
However, if a customer submits a negative review, that would decrease 5 points from their score.
So the concept here is to create a scorecard that outlines the metrics you selected to track beforehand.
There is no concrete customer health scoring system; every business has evolved or tweaked according to their preferences and models.
However, the basic idea says that if a customer shows all the positive traits regarding using and engaging with your product—they deserve a positive score.
On the contrary, if they’re submitting continuous negative feedback or inconsistent regarding the usage of the product—then it will decrease their score and this will alarm you about the risk of churn.
Customer success health metrics you need to track
Deciding upon the right type of metrics for the customer health score is a tricky task to accomplish. However, here is a list of crucial ones you shouldn’t miss.
- Product usage
Generally, most people tend to use the products they like more than the ones they don’t. It is true, but as mentioned before, that increased usage time isn’t always a positive metric to consider. Instead, we should track the consistency in the product usage.
So if you see a sudden decline in consistency and time of the product usage—it means you need to gear up and look for reasons which led to such changes.
- Customer sentiment
Tracking someone’s emotion is not as realistic and easy as it sounds, and customer sentiment is more qualitative than a quantitative approach.
The most efficient way to track this is to understand the existing customers’ willingness to recommend. You can run a survey and ask it directly to your customers rather than trying to follow your gut feeling.
- Customer engagement
The emails you send or content you post on social media, are those efforts fulfilling their purpose to engage the customers?
Customer engagement is a great metric to track, directly tied to the personal interaction of the users with your marketing efforts. Tracking this metric will tell you if your efforts are worth your time or not.
Conclusion
Customer success health score is an integral part of your business, however, it is always a work in progress. You cannot expect to drive results from a customer health score after five years of its inception.
Rather than depending upon historical data, prepare yourself to adapt according to the situation. Let Successeve help you in the process of creating and tracking your customer health score in real-time. Sign up for a free trial today!When a business is relatively new, it’s easier to manage your customers. But as a company grows and acquisition increases — it gets tricky and challenging to manage such a broad customer base.
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