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Anatomy of a High Performing Health Score

Kristi Faltorusso

Designing a Customer Health Score is likely one of the most impactful projects you can take on as a Customer Success Leader. Think about having the ability to foreshadow customer behavior based on certain risk signals and being able to intervene before it’s too late. Or, better yet, understanding positive signals  to help other customers replicate the positive, successful behavior. Whatever your end goal, there is no disputing that a properly constructed Health Score will be a tremendous value to you and your business. 

Well, now that we can all agree that a Health Score is necessary for proper proactive customer management, what exactly is a Health Score? Simply put, a Customer Health Score is a metric-based scoring mechanism used to predict customer sentiment and behaviors. As long as you understand the data and behaviors that drive your customers, you can easily construct a strong Health Score framework. 

How to Get Started 

The first thing you need to do is understand your customer data. 

1. Access 

To start, you need access to your data, which requires a clear understanding of where all of the customer data lives. Much of it can be found in your Customer Success platform, CRM, product usage reports, survey tools, marketing systems, etc. Ask around your organization, connect with IT and, of course, if you have a data team, talk to them.  

2. Accuracy

Next, you’ll need to make sure that whatever data you’ll be using for your Health Score is clean and accurate. Remember, bad data in, is bad data out. Consider the data source and work with a team to verify that the data is correct and reliable. 

3. Current

You won’t be able to make great use of stale data. Make sure you understand the refresh cadence for all the data you’re using – some data might be refreshed in real-time, other data points daily, weekly or monthly. Whatever the cadence, you’ll need to understand it and use it accordingly. 

4. Impactful

Not all data is meaningful or actionable. So, as you’re assessing  all of the data you have, think about what data elements are most important and what data will help you best understand your customers and predict their behaviors

5. Integrated

Once you’ve identified and sanitized all of your customer data, it’s time to determine the best place to store it and put it to work. My first recommendation would be to use a Customer Success Management Platform, like ClientSuccess. But, if you don’t have a Customer Success Platform right now, that’s ok, consider using a BI platform like Tableau or Domo.or, just consider starting simple by building your Health Score in Excel, which can still be very powerful and helpful for you.

Determining Your Perfect Metrics

Having built Health Scores at five different SaaS companies, as well as working with hundreds of other leaders at leading organizations, I’ve identified the eight most common metric categories to leverage when designing your Customer Health Score. Now, while there are eight categories, there is no requirement to use them all. In fact many companies will go for a “less is more” approach and start with  3 – 4 metric categories that make sense for their business. The point is, your Health Score is YOUR Health Score and it should be developed for your industry, your product and your customers. In fact, it’s rare to see two different companies with the exact same Health Score recipe.

So what are the top 8 metric categories?

  1. Engagement
  2. Usage
  3. Adoption
  4. Customer Journey
  5. Invoice Payments
  6. Relationships
  7. Advocacy
  8. Sentiment

Engagement – This will measure how engaged your customer is with your company/team. You can measure things like days since the last conversation/meeting or even how they are engaging with your content. Remember the metrics should be specific to your business. 

Usage – Here you will evaluate how often the customer is using your product or how many people are using it. If you sell licenses, you’ll want to measure license utilization to make sure purchase licenses are all being assigned and used as well.

Adoption – This metric assesses the breadth and depth of the customer’s product usage. Are they using the solution as intended based on use cases and outcomes? Are they using one part of the platform, or have they adopted multiple modules? If they are paying for additional modules or solutions, are they using everything they are paying for?

Customer Journey – For some businesses it’s important to understand how the customer is (or is not) advancing through the customer journey, and how long it’s taking to advance through the key stages/milestones of the journey. For example, are they “stuck” in a particular stage of their journey? Or, are they  hitting the critical milestones in the journey? . Some companies also attribute health to how long a customer has been a customer (customer tenure), and/or consider the lifetime value (LTV) of the customer.

Invoice Payments – This is a nod to everyone in Finance. But seriously, if your customer is not paying their invoices or has a habit of not paying on time, this is not a good sign. Maybe their credit card on file expired or was declined. Depending on your subscription and payment terms, this is important to consider. Or, maybe the customer has stopped payment due to negative sentiment about your solution. Monitoring customer payment status’ and trends, can give you great customer health signals.

Relationships – Every leader is tasking her Customer Success team to build relationships “high and wide”. You need to avoid being single-threaded and you can’t be naive enough to believe there’s only one person internally calling all the shots. You might want to measure the quality and quantity of these relationships; for example how many execs are you connected with and when was the last time you connected? You might want to measure how each person is engaging with your business? At the end of the day, you need to figure out what exactly you want to measure here and then back into the how. 

Sentiment – It’s important to understand how your customers feel about you and your brand, so measuring and monitoring customer sentiment is important. You can capture sentiment from survey tools, support ticketing systems, marketing platforms etc. but it’s important to know from a diverse group of people how they feel about you. NPS is a common industry survey used as a barometer for sentiment, but it’s important to measure and track data-driven insights as well as human driven insights to ensure a comprehensive understanding of how your customers view you and the partnership.

Advocacy – If your customer is willing to serve as a positive reference, if they are sending you referrals, if they are participating in your events, or talking favorably about you in their community, this is a good sign. And of course, if they aren’t, it’s important to take note of that as well. Measuring your customer’s willingness to participate in these types of advocacy activities is a great benchmark of partnership health and can be used to influence your Customer Health Score. 

Not Everything is Created Equal 

While each of these metric categories is valuable and can or should be considered as you design your Health Score, it’s also important to consider how much weight each category carries. If your customer is not willing to be a reference, should that outweigh your customer’s adoption and engagement? The weighting is as unique to your business as the metrics themselves, so you have to determine which is the most important and why. 

If I was going to use all eight of these categories in my Health Score today, here is what my category weighting matrix would look like: 

Engagement – 15%
Usage – 15%
Adoption – 15%
Customer Journey – 10%
Invoice Payments – 5%
Relationships – 15%
Sentiment – 15%
Advocacy – 10% 

This is what the roll-up view would look like, but if I have several supporting metrics per category, each of those would have their own unique weighting as well. Spend the time to think about what model will give you the best indication of customer behavior so you and your team can properly intervene.

So Great, Now What?

A Customer Health Score is only good if you put it to use, so I’ve created a 3-step process to make good on this important strategy. 

  1. Identify – Use your Health Score to identify customers who are trending towards risk based on behaviors and intervene before it’s too late. Alternatively this data can also help you identify your customer advocates in which case you need to properly leverage them to your advantage. 
  2. Ideate – Now that you’ve identified the customers you want to target, you need to determine what the plan is. This could be an opportune time to deploy one of your playbooks or it could be time for escalation. Before you take action, stop and think through the best course of action.
  3. Intervene – Once you’ve determined the best course of action, now is your chance to jump in. Whether the signals indicate something negative or positive, you have to get involved. Ensure your objective is clear and not self-serving, you want to make sure that the work you are doing is authentic and coming from a place of wanting your customers to be successful. 

Measuring the Impact

If you have designed your Customer Health Score effectively and used it as intended. you should be able to measure impact. ere are a few business KPIs I’ve seen positively impacted with the proper orchestration of a Health Score strategy:

  1. Increased Customer Value – Your ability to intervene when customers are struggling to properly use your platform will hopefully help them drive more value over time. If you wait too long to act on these signals, you risk customers progressing down a negative path in the partnership.

  2. Increased Customer Retention – Early intervention should also help you get ahead of any real partnership risk avoiding the lagging impact of churn. When you see things going sideways, get ahead of it and get a plan in place to course correct. The ability to do this quickly should increase customer retention.

  3. Increased Advocacy – Identifying successful customers through your Health Score should fill your Customer Marketing pipeline with strong referrals and individuals willing to partner with you on fun and exciting activities – guests for webinars and podcasts, impactful case studies, and even event speaking engagements.

  4. Increased NRR – While keeping customers is great, growing them is even better. If you design and leverage your Customer Health Score effectively, your team should be able to identify strong signals of product usage and adoption, which can lead to growth discussions and increased NRR. 

What’s the Bottom Line

If you haven’t implemented a Customer Health Score strategy for your company, hopefully we’ve convinced you of its value and importance. Leveraging Health Scores effectively will not only ensure you serve your customers better, but it will also provide a significant impact to your overall business performance as well. 

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