Track Your Customer Health Score to Improve Retention

Why do software marketers need to measure CHS? 

Software providers that rely on customer subscriptions and other recurring revenue streams are increasingly using CHS for tracking customer retention and churn.

But providers can’t just leave renewals to the customer success teams. Customer retention plays an important role in marketing too. 

According to Gartner research, 36% of technology marketers use customer retention rates to gauge the performance of their team.¹

CHS can be used by marketers to:

• Design content and programs that increase product adoption
• Determine the best time to pitch cross-selling or upselling offers
• Identify customers most likely to advocate your products and provide referrals
• Refine account plans by detecting early signs of customer churn and taking corrective actions for retention
• Increase the revenue obtained from existing customers to expand the use of current solution
• Validate the success of marketing efforts and make smarter decisions about where to allocate resources

Why is CHS better than traditional customer experience metrics?

To truly understand your customers and their satisfaction levels with your product or service, you need to go beyond standalone traditional customer experience (CX) metrics. For example, relying solely on feedback forms or one-on-one interaction with a customer success manager may not be enough to identify all the problems faced by a particular client or account. Plus, the timing of the feedback also matters; the survey responses may not come back in time for you to intervene for at-risk accounts. 

Customer health score combines multiple success parameters, including traditional metrics, to give a holistic view of customer relationships. 

How to measure customer health 

There is no mathematical formula to calculate customer health score. The optimal customer health scorecard for an organization depends on its business needs and the products or services offered. While the information used to develop the scorecard may vary, the approach to creating it remains the same. 

Here are some steps you can follow to calculate CHS:

1. Identify the important metrics that would affect your health scores, such as customer support data, last login, customer reviews and net promoter score (NPS).
2. Put those data points under a group of different types of intent data attributes related to customer health. 
3. Assign a weight to each attribute according to your business needs. For instance, if you want to steer product adoption, give higher weightage to metrics indicating product usage rate.

Use score ranges from 1 to 10 or 100, or use color codes (red, yellow and green), with a lower score or red color signifying the need for corrective action, to define good and poor customer health. These different score ranges, or intent signals, will provide insight into buyer behavior and overall customer health.

Identifying the key attributes to develop health scores

A customer health score should be composed of relevant, accurate and up-to-date data signals and attributes in order to reflect the true state of health of a customer and provide meaningful insights. 

Ask yourself these three questions to identify the most important attributes for your business and customer health scorecard:

1. What are the kinds of data sources to which you have access?

Every business collects a host of data around customer interaction, product usage and feedback, among other data metrics. Identify the sources of data you have and collaborate with the relevant functional partners to collect the data.

Check out the image below for examples of data signals you can capture under different attributes. 

2. Do these sources provide actionable and meaningful insights that are applicable to all individual accounts or customer segments?

Evaluate if the data you have access to is relevant, accurate and up-to-date. Assess what insights your data signals can provide and what desired outcomes they would cover. For instance, if you want to evaluate customers in the onboarding stage, ask if you have sufficient and accurate data for it. 

3. If not, what additional data do you need, and how to get it? 

Improve the relevance of your data by integrating new sources. Capture more information with tactics such as web tracking, surveys and feedback forms. Remember, if you have limited data in the beginning, start with a simple scorecard and build from there. 

Also read: How to Use Intent Data to Achieve Your Sales Goals

Start small with a simple scorecard

Trying to incorporate many data signals at the start makes it difficult to determine the effectiveness of a scorecard, not to mention the increased efforts that go into data integration. 

Start with a simple model with a handful of the most important data metrics and attributes. As your business and collaboration across departments grow, gain access to more customer data and update your scorecard. 

Improve retention by identifying accounts at risk of moving to competing solutions and uncover cross-sell opportunities to grow existing relationships with Buyer Discovery.