Making Health Scores Actionable
By Mike Su
Over the last five years I have had numerous CEOs and Customer Success leaders ask me for help with calculating or refining their customer health scores. I always turn it around and ask them why they feel they need to calculate or refine their customer health score. The response I typically get is along the lines of predicting churn or retention of customers, understanding their customers needs, or simply to know how their customers are doing. While these are valid points, they are really fluffy and do not fully satisfy my criteria for building out a customer health score. To me a health score is more than just an indication of a customer’s current state. A health score should also be more than just the sentiment of the last customer contact we spoke with; while that is important to note, it is only one factor of many to calculate a robust health score. An overall health score needs to be able to tell a story about how the customer is seeing value in the product or service. It should also tell me if they have any concerns or issues. Do they like us? Do they wish we do things differently? Will they be renewing their contract at the end of the year?
Not long ago a CSM I met on LinkedIn was telling me about one of their customers who churned even though they had a “green” health score. After digging in with a ton of follow up questions, I quickly discovered that their “green” health score did not carry much meaning and did not tell me a fulfilling story. Many important things were left unknown, such as how sticky or adopted they were with the product. It was unclear how their usage had changed over time. The “green” score also did not indicate what I believe was the culprit of their churn. The customer company had recent leadership turnover and the executive sponsor of the product and sole decision maker was no longer with the company. In my opinion, this customer should not have been “green.” In fact, with recent leadership turnover they should have been marked as a churn risk. In my opinion, this churn should not have been a surprise as it was to this CSM. In this example, the criteria for this customer to be “green” was for not having any open critical support tickets and their point of contact seemed happy. This is a good time to remind everyone that the job of Customer Success is not to make customers happy but to make customers realize value in their product or service.
A solid customer health score should be made up of a laundry list of metrics. In fact, I’ll even say that the Overall Health Score is composed of multiple health scores, each calculated using their own sets of metrics. In the above example, a Relationship score would have been helpful where it included metrics like having an executive sponsor or recent turnover. This would have dinged their Relationship score enough to trigger a call to action to address their leadership change. There would have still been a high chance of the customer churning, but at least the risk would have been known ahead of time. There could have been action taken to attempt to course correct the customer’s decision. The churn risk would have also been predicted and forecasted. Accurate revenue forecasting is important and affects many areas including calculating company valuation, company spend, overall budget, etc.
Bottom line, surprise churn is the worst kind of churn.
Here are some key considerations when building your Customer Health Score.
Does it tell a story? At a glance my health score should tell me:
Who the customer is and how strong our relationship is with the customer including their executive sponsor and decision maker.
How the customer is using my product and if there’s room for growth.
Whether they have any technical roadblocks
Whether we have any limitations as to how they would expect to see value
Does it predict churn with a clear indication of why?
Was there any turnover on their leadership team that could affect our executive sponsorship?
Have their priorities changed where they no longer see value in our product?
Has a customer declined joining your customer advocacy program? When a customer refuses to say nice things about you, that’s never a good sign.
Does it lead to actionable next steps?
If the CSM does not have a tight relationship with the executive sponsor, that’s task number 1 on the to do list.
If a customer’s adoption score takes a dip, it’s possible that they have shifted their priorities. It’s up to the CSM to get clarity from the customer and pivot the deployment to maximize value outcome.
The list can go on forever, but tell me what’s important to you in a customer health score.
The Success League is a global customer success consulting firm that also offers CSM and CS Leadership certification programs, as well as coaching. Please visit TheSuccessLeague.io for more information or to contact us.
Michael Su - Michael is a Customer Success innovator with over 15 years of working experience. While leading the team, he has designed, built, and successfully implemented Customer Success departments at various companies spanning from early stage tech start ups to publicly traded enterprises. He is passionate about improving processes and streamlining workflows. As a leader he loves working with people to help nurture and grow their professional careers. When Michael is not helping companies fight churn, he enjoys spending time with his wife, 3 kids, 2 turtles, and 1 dog.
