CSM from the Trenches – Three Keys to Understand Customer Health

January 22, 2016

Sam Feil

Customer Success Manager

I’m excited to launch my customer success blog series called CSM from the Trenches. In this series I will discuss trends, best practices, and advice for front-line customer success managers.

Being on the CSM frontline has allowed me to directly influence the success of my clients. I love that; as my clients are successful, I’m successful. Each day I learn from the trenches what it takes to make clients happy and successful. Let’s get started with this week’s blog post.

Understanding Customer Health

Many people have asked me the following questions about understanding customer health. What metrics should affect this value? What current behaviors or logic define it? Should it be automated? Great questions.

Let me first define what I mean by customer health.

Customer Health Defined

Customer health is the current state of customer satisfaction after a given engagement (i.e. emails, meetings, and phone calls). Are my customers happy or are they not? Pretty simple; if they are not satisfied, a game plan is created to improve their health and overall success.

Though data helps point me in the right direction, it’s not the only metric I look at when determining customer health. I’ve learned that data is not always king. My initial feeling-based health value after an engagement has been a great way to gauge client satisfaction.

Now that I’ve defined a simple version of customer health, here are the 3 keys that have helped me better understand it:

1. Customer Health Values Need to be Defined

I think it’s important to have some general guidelines for customer success managers as they determine customer health. Guidelines create organization-wide consistency on the health of customers. It helps if customer success teams sit down and determine which metrics they want to have as the standard for health.

I like a six-point satisfaction scale, ranging from “Extremely Satisfied” to “Severe Risk”. Below you’ll find an example of what could be taken into account as teams create such guidelines. There is latitude for each company to determine the detailed definition of each status, but it’s the exercise around customer health consistency that really matters.

Customer Success Six-Point Satisfaction Scale

customer-health-metrics-grid-clientsucces
2. An Honest Health Value is Better than a False Health Value

Being honest when setting customer health is much better than setting a false health value. Many times CSMs are pressured to always have awesome clients, so they misrepresent the actual health of a client. This is a major risk. It’s important to establish a customer success culture of honesty. A honest customer health value helps the customer success manager and team take proper action to improve the relationship. Not being honest on both ends of the health spectrum can lead to customer blindsides and even worse, churn. Being honest when setting customer health is always the best practice.

3. Holistic Customer Health Follows a Bell-Shaped Curve

What I’ve seen is that a holistic look at customer health generally follows a bell-shape curve. Most customer health values typically fall between “High Risk” and “Very Satisfied”. Only the best clients (daily usage, case studies, quotes, success stories, proactive involvement, etc.) should be marked as “Extremely Satisfied”, while only the clients who have reached out to cancel a contract or are very likely to churn should be marked as “Severe Risk”. The majority of your clients should be in the mid-to-upper satisfied range on the bell-shaped curve. Of course, remember key #2—be honest when giving a health value.

Understanding customer health starts with these three keys. I look forward to sharing more best practices, advice, and learning from the CSM trenches.

Check out our eBooks below for more customer success best practices and advice:

5 Ways to Surprise & Delight Your Customers

3 Steps to Putting Your Customer First This Year

Learn more about how ClientSuccess can help your company develop a strong customer success methodology and strategy with easy-to-use customer success software by requesting a 30-minute demo.

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