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What Is Customer Health Score and How Can Your Business Build One? 

Himanshu Agarwal | May 15, 2017 260 views No Comments

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If you’re a business that depends on its customers for success (pretty much every business), then you should be familiar with a customer health score. Now, you may not know exactly what that entails, but the chances are high that you have some kind of system in place that tells you the quality of each of your customers. For example, a lot of companies have a red, green, and yellow marking system that tells the health of each customer.

However, if you do use such a system, there are some pretty big limitations to take into account. This kind of system is almost always updated manually, meaning it takes time from your employees who could be working on more important tasks. The criteria you use for this system is generally very subjective and therefore, is not as accurate. As you continuously grow your business, there are going to be plenty of customers who haven’t been scored because you don’t have the time. And lastly, it’s hard to even tell why the customer is the color that they are without some serious digging, which of course takes more time and effort than is necessary.

Now, this kind of system is definitely a step in the right direction for any business that wants to know how each of their customers are doing. However, there is a much better way of going about it. Let’s talk more about this in the following article, so feel free to read along and learn how you can make your business more efficient and track your customers with more success.

Let’s Define Customer Health

First off, if you want to make great customer health system, then you’ve got to determine what the rankings mean in that system. For example, if you give a customer a score of a ‘C’ or ‘red’, what does that actually mean and how did you get to that label? Here are the questions to keep in mind when determining this:

  • Is the score you are using an indicator of contract renewal or churn?
  • How quickly can the score fluctuate from one marker to another?
  • What does it take into account? Does it account for the value you are giving to your customer and the value they are giving back to you? Or just one?
  • What exactly makes up the score and why are those points important to your business?
  • Are all of the elements that go into the score subjective or do some of them or all of them need to be objective?
  • What is the importance of each element that goes into the score?

Make sure to keep into account each of these questions and even more questions that we haven’t listed down. This process of coming up with your customer health score system is definitely a challenging one, but will help you determine what is most important in keeping track of your customers and what success means to you as a company.

If you’re in a health sector business, you need to keep a health score card for your customer to know how well they have been doing physically and mentally. To measure a patient’s experience is difficult but labs and institutions continuously research on how to make a set of algorithms to clearly define and match the health score with customer’s actual health. It might even involve testing of antigens against diseases, as such many of these lab gets antibody developed through other institutions to help them keep the cost of research process to minimum.

The Inputs That Go into Customer Health

Below, we’re going to go through some of the top elements that go into customer health systems. This is in an effort to give you some information to go off of when developing your own customer health score.

  • The customer’s overall usage of your product or service
  • Does your customer use the stickiest features of your product or service?
  • How much of the product does your customer use?
  • How many licenses are there?
  • How much growth have you seen in accounts?
  • How long has the customer actually been a customer of yours?
  • How many renewals have you completed?
  • How many upsells have you completed?
  • Are your customers spending more money on things like training and other services, becoming a better customer of yours?
  • What are your survey results?
  • Are your customers calling into customer support a lot?
  • What feedback are you getting on your product?
  • How involved in the community are you and your customers?
  • How long does it take for your customer to get from the end of onboarding to their first renewal?

As is obvious to see, there are plenty of elements that could go into your customer health score system. This completely depends on your company and what’s important for you to know about your customers. Think long and hard about what to include because you should ultimately be narrowing down this list to a manageable amount that can then be automated to determine the customer score.

Are there multiple customer health models?

If you thought that you would only be needing one scoring model for your customers, then you had better think again! It’s actually best if you have multiple scoring models for your company. You might see that it makes more sense to have one customer model for those customers who are below the 90-day mark and those customers who are more than a couple of years old. Or you can determine some other element that would separate one group of customers from another. This is something that you can figure out with your team.

When you separate out customer health models into different customer health groups, the value is huge for your company. Those businesses who have been shown to use customer health models find themselves with an even larger amount of recurring business than new business in the next 3-5 years. This means that you’re not going to have to work as hard in gaining new business as you already have a solid customer base who will recommend you to their colleagues.

Sure, this seems like a crazy long and difficult process to bring you through. However, we can tell you that it’s definitely worth it to get down to the wire and configure a customer health system that will allow you to accurately work with each customer on an individual basis. It goes without saying that without your customers, your business is not going anywhere. A customer health scoring system gives you the accuracy and efficiency needed to make all of your customers happy and healthy.

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