The 7 Components of a Health Score

By Kristen Hayer

When SaaS customer success professionals talk about their customer health score, they are often referring to a metric based almost entirely on product use patterns. Things like logins, users and feature adoption are weighted heavily in the customer health algorithms for these organizations.

In reality, customer health (even for SaaS companies) is based on a much larger group of factors. Depending on the business, things as simple as geographic location or as complex as funding trends can have an impact on whether a customer is truly healthy. As you build or refine the customer health score for your success team, here are some of the components you should consider.

Product Usage

While this shouldn’t be the only thing you consider, it should be a factor in your health score if you offer a technology solution. That said, really think about the usage components you choose. Does the number or frequency of logins really indicate health? Or, does the number of features being used better represent a healthy customer? Should you incorporate both? Consider things like logins, the number of users, the adoption of key features, reporting use, and data downloads or uploads, and choose only the items that best represent health.

Customer Actions

Another component to consider is a customer action. These are triggers that you can build into your health score, both positive and negative. Did your customer call you or submit a support ticket that was resolved? Those actions could indicate a positive change in health. Has the customer failed to return calls for a period of time, or recently asked about their contract terms?  Those could be indicators of poor health. Think about the actions your customers typically take, and consider incorporating some of them into your health score.

Demographics

Sometimes the customer may be inherently more healthy or risky, based on demographics like the industry they are in, their size or their location. Do the laws in a specific state make your customer less likely to stick with you long-term? Does your client’s size make them attractive to competitors? Is their industry such a great fit for your solution that you know they have few alternatives? Be sure to consider demographic factors as you build your health score.

Company Changes

Another input into your health score could be company changes that your clients face regularly. Did your main contact leave the organization, or was your customer acquired? Those factors usually put the customer at risk, which should be reflected in a lower health score. Did the company go public or receive a new round of funding? That may open up new opportunities that should improve the health score. Think about ways that company changes might positively or negatively affect health.

Customer Relationship

A slightly softer measure of customer health has to do with the relationship itself. Has the customer been with you for a long time? If you’ve had a rich relationship, that might be an indication of health. If instead, the customer has been through numerous product updates without a lot of contact they may be at a higher level of risk. Consider things like the level of engagement with various departments in your company (do they go to your user conference, attend all your webinars and always call their CSM back?) and the depth of the relationship (how many contacts do you have and in how many different departments?)

Feedback

Have you gotten feedback from your customers? This can be one of the best indicators of health or risk, since it is coming directly from your client. That said, one NPS score by itself isn’t enough to indicate health, and shouldn’t be weighted too heavily. Even if a client says they wouldn’t recommend you to a colleague, there may be many reasons why they need to and will stick around. A better way to incorporate feedback into your health score is to have surveys across your product and customer success touch points that feed into the overall algorithm. This will balance one contact having a bad day with other feedback that provides a more holistic view.

CSM Assessment

If you’re using a customer success platform (think Totango, Amity, Strikedeck, ClientSuccess, Gainsight) it can be tempting to focus on the previous 6 components. After all, they are relatively easy to quantify, track and incorporate into an overall health score. The problem is that you could be automating away one of the most powerful indicators of health: the conversations your CSM team is having with customers every day. It is not uncommon for a customer to be showing up as healthy in a CS platform right up until they churn. Without qualitative insights from your CSM team you might miss clues to health or risk.

By looking outside of product usage for customer health and risk factors, you’ll develop a more accurate picture of customer health across your base, and become better at predicting churn and driving engagement.

Do you need help developing a score that aligns with what customer health really means for your organization? The Success League is a customer success consulting firm that can help you identify the right health score components, and report on the overall health and risk levels of your customer base. For more information please visit our website – TheSuccessLeague.io