The Customer Health Score is an extremely important metric to assess the health of a company’s accounts and ensure customer success.
Organizations are realizing more and more the value of building solid, long-lasting customer relationships with customers as global market competition heats up. With its actionable insights into every aspect of customer interactions and experiences, the Customer Health Score is a potent tool in this process.
Businesses may correctly analyze the health of the customer base and identify areas for development by evaluating key performance indicators, collecting data from several touchpoints, and using weighted scoring models.
In this article, Greguy Valbuena, a specialist in customer-focused culture and change management, shares with us some of the most important points that you must take into account to achieve a positive score on the health of your customers.
What is the Customer Health Score?
The Customer Health Score is a metric organizations use to assess their customers’ overall well-being and satisfaction. It is a quantitative overview of the customer’s relationship with the company, reflecting their satisfaction and engagement with the products or services they receive.
Establishing, monitoring, and responding to a customer health score for individual users and/or accounts assists customer success managers in recognizing and reducing risk before it increases.
A medical checkup allows people to carry out a series of tests that give us important information to prevent diseases and establish the detection of the main risk factors.
In the case of clients, when we talk about customer health, we refer to the variables that must be reviewed periodically and allow us to establish which customers are:
- Healthy: To obtain a better prediction on renewals and additional sales.
- Unhealthy: To evaluate the possible risks of desertion of the same.
Both points lead us to an action plan and make the Customer Health Score a powerful instrument that lets us know where we are with our customers and determine where we want to take them.
This is where many of the questions start, like
- What makes a healthy customer?
- How do I measure the customer’s health score?
- How to calculate customer health scores?
- Why worry about customer health?
A high Customer Health Score often indicates satisfied and loyal customers who are more likely to stay with the company. In contrast, a low score may signal potential difficulties that must be addressed to prevent customer churn.
Monitoring and evaluating the Customer Health Score regularly allows organizations to remain proactive and customer-centric, ensuring a healthy and long-term relationship with their customers.
What makes a healthy customer?
A healthy customer is one who, thanks to your product and/or service, is on the way to successfully achieving their business objectives. Therefore, they appropriate the product, meet their expectations, become an expert in its use, and have a high satisfaction index.
We all want to have these types of clients, but this does not happen with a magic wand or by chance; the work is daily. Several factors contribute to making a customer healthy:
- Satisfied: They are content with the products or services received.
- Engaged: They actively use and interact with the offerings.
- Loyal: They show repeat business and long-term commitment.
- Responsive: They provide feedback and communicate with the company.
- Profitable: They generate positive revenue and are cost-effective.
- Advocate: They promote the brand to others through word-of-mouth.
- Low Complaints: They have minimal issues or complaints.
- Renewal/Repurchase: They renew subscriptions or repurchase products.
- High Retention: They stay with the company over an extended period.
- Referral Source: They refer new customers to the company.
The way of calculating customer health scores varies and is almost unique for each company since it will depend on the customer health score metrics that the business considers most valuable.
How to measure the Customer Health Score?
Before the show, we have to define the what, that is, what are those signs that will warn you long before the client abandons. This means that we find an intention, a thought, a perception that can lead us to do it. There are some points that can be used as a reference to build the customer health control panel:
This has to do with two factors: the product’s adoption and its percentage of use. Is the customer taking full advantage of the product’s functionality?
This point is key because a client who invests in their training shows that they are interested in being autonomous, incorporating best practices, and strengthening their knowledge.
The frequency of use of this resource also gives us interesting data and feedback to focus on establishing action plans with the client. Are you calling to ask the same questions? Does it denote a lack of knowledge or autonomy about the product? Does it have more failures than expected?
Customer success and customer experience are deeply linked. When the two work together, you get better results.
The measurement of the NPS ( Net Promoter Score ) and the metrics related to the value interactions with the customer are key information to determine the positive association with the brand and the perception through the customer journey from the onboarding process.
- Financial health
Customer payment behavior. A customer who pays their bills on time is a customer who does not want to have any kind of inconvenience with your product or service and will not run out of budget to make the payment.
Remember that you are looking for results that allow you to mitigate risks and take action, so the suggestion so that you can model it in your organization is to be specific in the points that you are going to take as reference points for renewal and identify how you can use this dashboard in daily work.
Keep a measurement system simple and easy to determine that leads to having visibility of the health status of clients and that, in turn, is flexible so that it can be refined with new relevant data to improve your strategy of customer success.
Color codes, traffic light type, or numeric, based on values within ranges, are the most commonly used for this customer health scoring system. In the market, there are many free and paid tools that allow you to create a control panel. Make sure you can use them competently so that practically the customer success team has this resource at hand.
3 keys to the Customer Health Score
The process of establishing a customer health dashboard requires significant effort, but the short-term benefits are worth it as a source of customer success strategy.
Motivation, measurement, and monitoring create the foundations of this practice, and it surely becomes a key tool for sales, renewals, marketing, and customer success teams.
The purpose is what gives meaning to these data leading the account team to observation and reflection in order to take action. Without action, the board would be of no use.
If the client is in good health, then action towards renewal and growth. If it does not have it, action towards the improvement plans to remedy that state.
The metric information must be efficient, sufficient, and timely. Metrics outside of these three parameters render the client health dashboard obsolete. Do not expect perfection; take this data to prepare yourself on the field from another position and promote better management of the account team and the actors of your company that interact with the client.
Evaluate progress periodically; you know the rhythm more than anyone. Be clear about the checkpoints to avoid surprises that lead to desertion and use the information to predict future customer behavior.
Customer Health Score is a vital indicator for businesses that want to focus on customer satisfaction, loyalty, and success. The Customer Health Score enables businesses to retain a customer-centric strategy, promote business growth, and establish a competitive advantage in today’s changing market through data-driven decision-making, resource allocation, and continuous monitoring.
Keep in mind that customer success is something that never ends, and that towards it, the control panel becomes a powerful instrument where you will have an initial diagnosis on a single page that will make it easier for you to focus not only on the remediation but also where generate value and anticipate with your customers.