Health scoring is a hot topic in Customer Success, thanks to the explosion of customer data available to subscription-based businesses. Savvy Customer Success Managers leverage this data to proactively monitor customer health and spot accounts that are thriving or at-risk.
What is a customer health score?
An ideal health score captures the attributes that best reflect a successful customer. It's a useful metric for understanding a customer's overall health, as well as the health trends for a segment of accounts or the business as a whole.
Health scores help CSMs gauge the status of their accounts and prioritize customer outreach. They can also be used as one of several ways to measure the performance of the CSM team.
Configuring health scores
Health scores can be configured using a variety of factors, from product adoption and engagement to the perceived quality of the customer relationship.
Common health score factors include:
- User activity
- Feature adoption
- Support history
- Billing history
- Customer feedback
- Relationship strength
- Complexity score
User activity and feature adoption are objective metrics based on in-app usage. Support ticketing trends, billing history, and customer feedback (e.g. NPS or CSAT) also offer quantifiable indicators of perceived value and loyalty. In contrast, a CSM's personal assessment of the customer relationship is more subjective and nuanced.
In addition, CSMs should incorporate other Key Performance Indicators (KPIs) that are uniquely relevant to their business.
Metrics like "Storage Consumed," "Campaigns Launched," or "Contacts Created" are all examples of potential KPIs. Of course, these will vary depending on your product or business, but when included, they can significantly elevate the accuracy of a customer health score.
Given the variety of SaaS products and usage models, it's essential for a health scoring tool to provide a great deal of flexibility in terms of potential configurations.
Crawl, walk, run
Freshdesk Customer Success allows health scores to be fine-tuned for the needs of each business.
For example, some CSM teams might prefer to focus on user activity above all else. Other teams may prefer to lean on NPS scores or other non-usage data instead. Others may want to include a combination of both approaches.
Whatever your goal, start with a health score configuration that is simple and easy to understand. Resist the urge to include everything right away. Too many metrics will make it harder for you to validate your initial results in the beginning.
Weighted health scores
In addition to selecting the right factors, you should also consider the relative impact of each metric on the overall health of an account.
For example, you may see a high-volume of support tickets when launching a new product or introducing new features.
But this is not necessarily a bad thing.
In fact, it could be perfectly natural that your customers are submitting lots of questions and creating many tickets. In this scenario, you might underweight the number of support tickets as an indicator of poor health.
Here is one example of a health score configuration in Freshdesk Customer Success:
This health score configuration evaluates three different factors:
- Number of outstanding support tickets
- Level of product usage activity
- The CSM's personal assessment
However, product usage is given a bit more weight (40%) compared to the other two metrics (30%), and thus it has a slightly bigger impact on the overall health score calculation for each customer.
Segmenting health scores
Depending on your customer base, you may find that a one-size-fits-all health score is unrealistic.
Metrics and thresholds may differ between your Enterprise and SMB customers. Or, you may want to focus on different KPIs along the customer journey.
Creating multiple health scores will let you fine-tune each configuration to better evaluate customer health across your entire portfolio.
In the following example, there are two distinct health score configurations:
1) "Onboarding," and 2) "Default."
Here, customers are given a specific health score configuration while they are in the onboarding phase, and another health score configuration once they have progressed in their lifecycle.
Other examples of health score segmentation:
- Account value (current or potential)
- Number of users
- Product or subscription
- Maturity level
- Geographic location
- ... and many more
Start with what you know and test assumptions
Once you've decided which factors are important, it's time to configure your health score and weight the individual components.
Start by looking at accounts that you already know are healthy, as well as some that seem to be struggling. Analyzing your existing customers will help you establish some initial thresholds for each of the factors you are evaluating. Monitor and adjust your thresholds over time — a customer health score should evolve along with your product and business.
In other words, don't just set it and forget it.
Another good practice is to test your assumptions about customer health using historical data. You may find that certain metrics don't coincide with poor customer health or that weighting should be adjusted based on its relative impact on the overall score.
Analyzing customer health
Most Customer Success teams tend to bucket the health of their accounts into three categories: 1) green, 2) yellow, and 3) red.
In fact, the term "red account" is synonymous with poor customer health.
While color-coding is great, customer health should also be represented by a quantifiable score. This helps CSMs understand the health trend of an account, regardless of its current color band.
Let's look at a potential health score range:
- Green: 71 - 100
- Yellow: 41 - 70
- Red: 0 - 40
In this case, if an account is currently at 75 they are considered green. However, if this account was 85 last week, and 95 the week before, it might be time to start addressing this account's steady decline!
Conversely, if an account is currently 65 they are considered yellow. But if this account was 50 last week, and 45 the week before, then it might be a positive sign that the account is now heading in the right direction.
In other words, a quantitative health score provides additional context for CSMs over time. Depending on the size of your customer portfolio, it can also help rank and prioritize accounts within each green, yellow, and red health band.
Check your results
Finally, you should examine the results of your configuration to see if it's representative of some of your well-understood customers — both healthy and risky accounts.
If the results don't line up with your expectations, simplify your metrics to help you troubleshoot the culprit. Lastly, ensure each account is using the right health score configuration as they progress in their customer journey.
There's no hard science to configuring a health score, and some accounts may not fit perfectly into your mold. But with some careful consideration, and a bit of tweaking, you should be able to come up with a model that does an effective job of capturing the health of your customers.