How to Measure Your Customer Health Score
A customer health score is an inevitable metric to measure the customer success of a product or a business, especially involving SaaS. It is also one of the trickiest customer success key performance indicators (KPI) to measure. Customer health score depends entirely on the nature of your business and certain, specific metrics that are crucial for the business.
A customer health score indicates whether your customers are satisfied with your product or will churn and stop doing business with your company. Monitoring the customer health score and prioritising the customers at risk of churning can help you give them good customer service and improve your customer retention.
Within the organisation, the customer health score can give an idea of how good your customer service is and how much effort should go into retaining them. Stakeholders can take this information to plan and strategise accordingly.
Understanding how to measure and visualise the customer health score is vital for every business. It also helps identify patterns and figure out plans that work with healthy customers and methods that do not work well with unhealthy customers.
How to Measure Customer Health Score?
Customer health scores are tricky because it does not have a standardised or fixed method of measuring. Each business will have its factors to consider while formulating customer health scores.
A factor that works for one organisation may not have anything to do with the other. That is why a customer health score is something every organisation comes up with by themselves.
Even if there is no fixed formula to measure the customer health score, some general factors can be considered to customise the metric that works for you.
Factors to Consider while Measuring Customer Health Score
Many individual factors contribute to a customer’s health score. Mixing and matching these factors to cater to the needs of your business can. give you a customer health measuring system that works for you. The elements you pick depend on your customers’ needs and their fulfilment efficiency.
This is a factor that gives an idea of how much a customer uses your product and its features. To get even more input, you could measure the breadth of usage of the licences a customer has purchased from your product. Along with the depth of the usage, the percentage of the features the customers use. It gives you an idea of how much of a need the customer has and how much they use your product to fulfil their needs.
Time as Customer
This factor measures how long the user has been your customer. This gives you an idea of their loyalty level and the time of their renewal. If the customer has been using your product for a long time, it would indicate that they are most likely to be happy with your product.
Product Renewal Rate
To give more insight on how happy a long-term customer is with your product, you need to measure their renewal rate. If a customer regularly renews the product, they require your product and are satisfied with it. Also, depending on how quick they are renewing their product, you can learn about their needs.
Customer feedback might be an old way of acquiring information about your product, but it does have its benefits that are still useful to determine a customer’s health score. Using the feedback from the customers in the case of written form, you could analyse the sentiment of the customer and place points on them. In the case of a point system, you could directly use them to factor into your customer health score.
A customer engaged with your product may be forthcoming with your community engagement programs and seminars. Such customers tend to value your product and your brand. It should also be noted that customers who do not participate in such engagement programs should not be marked negatively.
Support Call Frequency
If a customer is frequently calling for help or support for the features of your product, it indicates that they may be having trouble with them. Such customers are more likely to quit your product if they feel that the system is too complicated to use. Good customer service can change their feelings about the product for the better.
Methods to Indicate Customer Health Score
After including the various factors that you find suitable for your product. It is now time to accumulate them and indicate them. It helps with understandability for all the stakeholders involved in the organisation. Combine the factors and reduce them to a single unit to measure your customer health score.
The colour code is a simple way of indicating a customer’s health. It is the easiest way of displaying the health of a customer. Ideally, the colours red, yellow, and green indicate the customer’s health score.
Green: The customer is healthy and would most likely acquire more features of your product if they find it useful. They are the ones who have the highest score according to your factors.
Yellow: The customer does not have a good score but is also not at risk of churning.
Red: The customer is at the risk of churning, and without proper attention, the customer could lose interest in doing business with you.
A scale system depends on the product, and even the length of the scale can vary based on the product. The colour system cannot be used in every instance. If the colour system fails, numbers are used as an indicator. The advantage of the number system is that they are easy to present and visualise in various formats.
A grading system makes things a bit more complicated, but it can be useful if you want your organisation to follow a uniform standard. Letters are used to segment customers with a grade of your style. The grades could go from A to E, with A being the healthiest customer and E being the customer at maximum risk. Tweaking the system offers a wide range of health scores for your organisation.
The customer health score model is unique to every organisation. There might arise an occasion where a single customer health model might not work for your product. For customers from various demographics and for your different products, it is better to tweak the customer health score system for them. Having multiple health score systems is better when compared to having a system that is ineffective for your different customer base.
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