Customer Health Scores: The Mistake in Customer Success

by Chris Arringdale Customer Success, Proactive Solutions

If you work in customer success, you know that anything can go wrong, on any given day, and no contract is a done deal until the dotted line is signed. Even the best customers can be wooed by deals offered by your competitor. As a leader in customer success, it’s important to catch clients before they are snatched by competitors by understanding the early warning signs.

Customer health scores will solve two major issues that your company might be facing — customer retention and the effectiveness of your customer success team. When you understand the health of a customer, you gain a better insight into how the customer success team manages their accounts but also insight into product engagement, the number of issues your product or service is having and if they are willing to be a product advocate or not. These two things will increase your ability to assess your customer pipeline and the employees that are involved. Your approach to employee and product development and feedback can be more directed and help solve any issues that need development.

Keep Health Scores Up-to-Date

Customer health scores can change direction very quickly. Monitor them on an ongoing basis in order to maintain an up-to-date look at all active accounts and provide a better understanding of your team’s performance. Customer health scores can be performed similarly to a lead scoring system used by your sales and marketing department. See for yourself! Each of your customers is given points based on different qualifying actions. The overall score dictates the health of that customer. The data points that your customer success team will use depends on how your department operates and what is deemed important.

Understanding your customers’ health is the key to #retain more customers. Grow your company with @kilterly today. Click To Tweet

Like a lead scoring system, you’ll want to build out the different parameters and define what a healthy customer looks like. This can take shape in a variety of ways and is by no means a one-size-fits-all approach. It’s also a very subjective task.  While it can be automated, this process is best if parts are left to be done by the representative who owns the client. Once you define the metrics you want to use for this type of system, you’ll then need to create benchmarks, similarly to a grading scale (A-F).

Integrate Metrics into Your Customer Health Score

When choosing metrics, it’s important to look at both good and bad outcomes and score accordingly. For example, if your customer downgrades their services, it should be a negative mark on their overall scorecard. Make sure to include metrics from each part of the business including overall business metrics, support metrics and product usage metrics. As a company, you can decide the number of metrics you want to use whether it be 5 or 50, but make sure the statistics you’re choosing make an impact on the overall health and relationship you have with that client.

Metrics to use for a customer health scoring system:

  • Overall usage of your product
  • Usage of the stickiest features of your product
  • Depth of usage – % of product used
  • Breadth of usage – # of licenses
  • Growth of the account (could be $$ or licenses)
  • Length of time as a customer
  • Discount level
  • # of renewals completed
  • # of upsells completed
  • % of spending that is non-recurring services
  • Survey results
  • How often do they call Support?
  • Case study participation
  • Client to prospective client calls
  • Website reference
  • Marketing event participation (trade shows, etc.)
  • Customer event participation
  • Product feedback
  • Community involvement
  • Invoice history
  • Length of time between the end of onboarding and first renewal (for new customers)
  • Overall relationship
Customer #HealthScore results in a valuable and productive #CustomerSuccess team. Unlock the answers from @kilterly that you never knew you needed. Click To Tweet

While a customer health score isn’t a crystal ball, understanding your customers’ health is key to recognizing which accounts are at risk, reducing customer churn and renewing existing clients. Find out what is increasing customer loyalty and what is holding your company back from customer success equilibrium by requesting a free demo.  Kilterly holds the answers you never knew you needed.

worker taking notes on different customer metrics

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