If you’re running a SaaS business, you know that the growth of your company relies, more than anything else, on delivering value and growing existing customers. Acquiring new clients is essential, but if many of them leave, your business will never grow.
In order to act proactively in taking care of your existing customer base, the first step should be to assess the health of your customers.
What is a Customer Health Score?
The Customer Health Score is a global indicator that aims at answering two critical questions :
- Is my customer successful with my product?
- Is my customer achieving his/her desired outcome with my product?
In order to answer these questions, companies use the “Customer Health Score”, a computed KPI based on multiple dimensions of customer data metrics. The CHS helps you classify customers into a single representation of green (healthy), yellow or red (at risk) buckets, expressing how luckily your customers are to stick or to churn.
Customer Health depends on a number of factors, such as:
- The overall usage of your product
- The usage of the main features of your product
- The depth of usage (percentage of product, or number of features used)
- The breadth of usage (number of users)
- The number of users among C-level executives
- The history of the customers (number of months/years of usage)
- The number of renewals and upsells completed
- The number of contacts or complaints to the support
- The number of interactions with marketing (blog posts, white papers, webinars, …)
- The overall satisfaction using your product (product feedback, surveys, net promoter score, …)
- And many more.
A common mistake is to only consider customer activity. Your customers may use your product every day without getting as much value as they could, or in desperation while trying to find a new solution. This is why you should always consider several dimensions to compute your Customer Health Score.
How do you score it?
Some of these indicators can be computed by hand, especially for new users who tend to have more contacts with your company during the onboarding and training phases. But as your business grow and the more your users go into the different phases of the customer lifecycle (adoption, maturity), the harder it will be. As a result, more and more customers will end up being unscore.
That’s where a customer success tool like Salesmachine come into play to automatically compute a Customer Health Score. The first step consists of defining your key criteria to good health and bad health for each stage of the customer journey. Indeed, the Customer Health Score must evolve over time: different indicators matter at different stages of the customer lifecycle.
During the onboarding phase, your customer tends to contact you quite often in order to set up his/her account. One of the key indicators to consider can be the time since the last interaction. These interactions will help the CSM directly get a sense of the customer health, that we call “customer pulse”, and add it to the general health score. Another key element is the accomplishment of product milestones: account configuration, number of users invited, etc…
Ongoing (adoption, maturity, renewal)
Once a customer is out of the “onboarding” phase, good or bad health will depend on criteria such as:
- License utilization: what percentage of users really use the product for this account
- Key feature usage variation: is a key feature that was used before being left out by the customer?
- Upsell opportunity
- Referrals: Have the customer ever referred your product to anyone? Would he/she? You can use the NPS score here.
Once you’ve defined which criteria define for your business whether a customer is in good or bad health, the data is computed in real time, helping CSMs follow trends over time.
How should you leverage it?
The Customer Health Score helps you identify signs of declines and react automatically. Your “at risk” customers are not only the ones in the red bucket. If a customer shifts from green to yellow, it is already a sign of decline and a trigger for your to act on.
Once you’ve scored your customer into green yellow and red buckets and identified trends for each customer, you need to know how to act on it using playbooks.
Playbooks are your team recipes to know exactly how to react to each situation:
- List of tasks to perform when customer adoption is dropping to bad: direct call, webinar, send “how to’s” and videos, etc.
- Step-by-step onboarding process for new customers
- Email sequences to send when upsell opportunity is detected
The Customer Health Score is also a great indicator to follow for your company dashboard, and even your board meetings. You can for instance set a goal of having less than 5% of customers in the “at risk” bucket. Having your Customer Health Score in every one’s mind will help your company focus more on providing value and taking care of current customers, rather than just acquiring new ones. And this mindset is the key to build a performing growth engine.
Automatizing your customer relationship is not for everyone. High touch businesses with a limited number of clients and a high ARPU (Average Revenue Per User) can afford to spend more time with their customers. But for Low Touch businesses with a high volume of customers and a low ARPU, Customer Success is not an option. Scoring your customers’ health is the only way to proactively manage your customer base and to ensure the success of your business.
Wanna see how Customer Health Scores can help your business grow? → Try it out