Customer health scoring: A practical guide

Have you ever been blindsided by a customer cancellation request?

It’s a sinking feeling that Customer Success Managers know all too well. It usually starts a mad scramble to save the account, but by this point it’s often too late.

The truth is you can’t “check-in” with every customer all the time — they will eventually ignore you. Instead, you need an early warning system to help you spot trouble while you still have time to act.

That’s where customer health scores come in.

Savvy businesses use health scoring to identify accounts that are thriving, struggling, or somewhere in between. Instead of relying on intuition or lagging indicators, Customer Success professionals use health scores to proactively spot customer risks and even opportunities.

What is a customer health score?

A customer health score encapsulates the attributes and behaviors of successful customers. Health scores help Customer Success Managers gauge the status of their accounts so they can reach out to the right customers at the right time.

Health scores can help answer questions like:

• Which accounts are disengaged with my product or service?

• Who is likely to renew their contract or subscription?

• Which customers would be good references or advocates?

• Are any customers likely to churn?

So, what goes into a customer health score, and how should you design yours?

Identify your metrics

A customer health score is a collection of key metrics. These can range from product adoption and user behavior to customer feedback and personal assessments. When considered together, these metrics help paint a more complete picture of customer health.

Here are some examples of popular health score metrics:

• User activity

• Feature adoption

• Support history

• Customer feedback

• Relationship strength

Let’s break these down in more detail.

Usage

User activity and feature adoption measure how your customers engage with your product or service. How active are they on a daily, weekly, or monthly basis? Have they adopted “sticky” features that are difficult to abandon or replace?

Support

Support history considers ticket trends and the number of open issues. Support is tricky because it can indicate active engagement (positive) or difficulty of adoption (negative). Therefore, a good rule of thumb is to determine how many outstanding support tickets are acceptable before they begin to negatively impact your customer health score.

Feedback

Customer feedback like Net Promoter Score (NPS) or Customer Satisfaction Score (CSAT) offer quantifiable indicators of perceived value and loyalty. They can be very strong indicators of health, albeit for a very specific point in time.

Relationship

Unlike the previous metrics, relationship strength is a subjective assessment of customer health. It relies on Customer Success Managers to quantify the customer relationship based on their recent interactions — or lack thereof. This should include executive stakeholders as well as key points of contact or power users.

Assign weights

Once you’ve identified your metrics, it’s time to determine their relative impact on the overall health score.

While each metric can be meaningful, not all metrics are equally important. User activity and feature adoption may be more important in one business, while consumption and support metrics might be more important in another.

Here is an example of a weighted health score in Freshsuccess:

This health score configuration evaluates three different factors:

1. Number of outstanding support tickets (30%)

2. Level of product usage activity (40%)

3. CSM’s personal assessment (30%)

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.

Whatever your approach, resist the urge to include every possible metric from the start. Instead, establish an accurate baseline and slowly increase the complexity of your customer health score over time.

Segment your health scores

Do you serve different customer tiers or offer multiple products? Does your customer journey involve separate, distinct phases?

Metrics for success can differ between Enterprise and SMB segments. They can also vary between stages of your customer lifecycle. If you have a differentiated customer base, your health scoring needs to be differentiated as well.

The following example shows three health score configurations:

Here, customers receive a specific health score configuration while they are in the onboarding phase, and another configuration once they’re considered established customers. Finally, a default health score serves as a catch-all for customers in any other stage.

Fine-tuning customer health by lifecycle stage is just one popular example. Here are some other ways you can segment your health scores:

• Account value (current or potential)

• Number of users

• Product or subscription

• Maturity level

• Geographic location

Now that you’ve picked, weighted, and segmented your metrics it’s time to quantify your customer health score.

Define your health bands

Customer Success teams tend to bucket the health of their accounts into three categories: 1) green, 2) yellow, and 3) red.

While color-coding is great, customer health should also include a quantifiable score. Scores help 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 75, it is 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 65, they are considered yellow. But if this account was 50 last week, and 45 the week before, then it’s a sign that the account is heading in the right direction.

In other words, a quantitative health score provides additional context for CSMs over time. It can also help CSMs rank and prioritize accounts within each green, yellow, and red health band.

Automate health scoring

One of the biggest hurdles to sophisticated health scoring is data aggregation. Customer data resides in many different places, and repeatedly compiling all of your key metrics is no easy feat. It creates time-intensive grunt work that distracts CSMs from their core mission — helping customers. As a result, most manual initiatives fail because busy CSMs just don’t have the time to keep their health scores up to date.

Fortunately, customer success software like Freshsuccess can automate health scoring so CSMs can focus on the right customers at the right time. By capturing user behavior within your product, and syncing customer data from other business applications, these tools ensure your metrics are fresh so your health scores remain timely and accurate.

Remember, there’s no hard science when it comes to creating a customer health score. Shortlist your metrics, weight them by importance, and segment as needed. Once dialed-in and automated, customer health scores can greatly improve your customer success efforts over time.

If you’d like to learn more about configuring and setting up Health Scores, be sure to enroll in Freshworks Academy and take our course on Freshdesk Customer Success.