November 11, 2021

    Creating your Health Score System

    USER_IQ_022_HealthScoresAs a customer success manager, you’re already a pro when it comes to spotting those accounts:

    The ones that show clear signs of churn. The ones you feel in your bones.  

    However, what you also know is how difficult it can be to keep an eye on things as your organization grows and you begin to acquire more customers.

    By developing a health score system, your team can implement a more proactive and scalable approach to customer success, leading to happier users and higher recurring revenue.

    Why your customer success team should be using health scores

    While it may sound like a bit of magic, health scores are more like the perfect combination of arts and science.

    At its most basic, a customer health score is an aggregate of two things:

    1. Objective data: It’ll be up to your team to find which of these metrics matter most across the customer experience. Not sure how to do that? You’ve come to the right place.
    2. Sentiment: That gut feeling we talked about earlier? This is where that comes into play. While customer and employee feedback can’t always be measured in objective terms, they are both still a highly valuable resource for your success team to consider.

    Keep in mind that these scores can be represented in a variety of visual formats. So long as it makes sense to your team, there’s no real limit to how you can represent your health score. Some standard formats include a numeric scale of 1 to 100, color-colored rankings and an alphabetical grading system.

    As a holistic rating of the customer experience, a health score represents the entire relationship between you and your users. We like to think of it as the sum of every interaction — good, bad and indifferent.

    As of today, about two-thirds of companies are competing on the customer experience — a number that’s only expected to rise, according to Gartner. It’s no longer enough to have a great product. Your team needs to create a one-of-a-kind experience for your users where their needs are anticipated and addressed before they ever even arise.

    For SaaS companies, providing world-class service and support will make all the difference.

    With a health score in hand, you’ll be able to do just that — just so long as you follow best practices.

    We’ve found that over 70% of companies are already using a health scoring system as a way to get ahead of their competitors. However, many of them are seeing the returns they expected. In fact, just 33% of customer success professionals say they trust health scores as an accurate reflection of the state of their accounts.

    Here's our "record scratch" moment: Where’s the disconnect?

    Time and time again, we've found that there are three common mistakes that lead to health scores being less useful than they should be:

    1. Improperly set benchmarks
    2. Overly complex scoring criteria
    3. Lack of clarity and accuracy

    How can your team avoid falling into the same trap that 67% of health scoe users encounter? It all starts with setting clear benchmarks that align with your core business outcomes like retention, churn and expansion.

    Not sure which benchmarks will best align with your organization’s strategic goals?

    Let’s dig into it.

    What does a healthy customer look like?

    Stop us if this sounds like your company: You've been prioritizing renewal, but some serious operational issues stand in your way, including a lack of visibility and an approach to success that's too reactive.

    Too familiar for comfort? Don’t worry. Your customer success team is far from alone in this battle.

    Maximizing retention will be difficult — if not impossible — if your organization lacks a clear understanding of what a healthy customer looks like. While every team may have a different definition of what a “good” account will look like, there are some objective metrics that team every can use as a framework for their scoring system:

    High customer lifetime value (CLTV)

    CLTV represents how much value a customer has generated for your company over the duration of your relationship. If you're able to guide a user through renewal and, eventually, expansion, their CLTV will begin to rise.

    Segment your user base by CLTV to understand which accounts are your most valuable. From there, you’ll be able to use this group as a model for your healthy accounts.

    Fast product adoption

    For your newest users, the name of the game is getting them to see the value of your product as quickly as possible. The sooner they see proof that they’ve made the right investment, the more likely they are to become brand advocates down the road.

    Once you’ve found which accounts have the highest CLTV, look to see their product adoption time and use that as a benchmark for your current onboarding processes.

    Net promoter score ranking

    An NPS survey works to boil down the customer experience into a single question: How likely would you be to recommend our product or company to a peer?

    As an experienced customer success manager, you already know that an NPS survey can’t really capture the entire customer journey. However, as a benchmarking tool, it not only provides valuable insight into user sentiment, but you can also use it as you work to separate your healthy accounts from your unhealthy ones.

    Plus, after you’ve identified your promoters, it’ll become easier to leverage their value as brand advocates. 

    Just remember: These aren’t the only signs of a healthy account. As your team begins to dig into all of your historic customer data, you’ll start to find which metrics matter most when it comes to your own users.

    When does account health become at-risk?

    Now for the other side of the customer success coin: How do you know what to look for before a user churns?

    The hardest part of preventing churn is the inherent fact that it’s a lagging indicator. By the time you’re able to measure your churn rate and perform analysis on your lost accounts, those customers are already long gone.

    Good thing your health scoring system is about to help you overcome that challenge.

    Similar to how we used your most valuable users as a way to define health, customers who have churned in the past will serve as your model for at-risk accounts. By looking back at these profiles to understand their behavior leading up to cancelation, you’ll find how certain metrics correlate with churn.

    We recommend using the following data points to flag your at-risk accounts:

    • Product usage: Decreasing login frequency, feature usage and time spent in-app will all help you to flag accounts that may be soon to churn. Just keep in mind that depending on the type of solution you offer, your definition for standard activity levels will vary.
    • Support tickets: If a user is single-handedly responsible for the majority of your support team’s workload, something isn’t right. Your product should be making their day easier — what it shouldn’t be doing is creating just another point of frustration.
    • Engagement rates: Has an account gone dark? If your emails are going unopened, chats are ignored and meetings are canceled, churn is likely soon to follow. In the future, it may prove valuable to create lifecycle maps to better understand which content your users respond best to.

    You may have noticed an important point missing from that list: user feedback.

    This goes without saying, but customer feedback is invaluable. It's your first-hand look into what is and — maybe more importantly — isn't working with your product. However, it's far from being the best churn indicator there.

    Not only does customer feedback fall into the "subjective" category of your scoring system, but it's not always all that accurate. Research has shown that if you have 26 customers, only one will actually vocalize their frustration.

    We would recommend incorporating feedback and user sentiment as a portion of your overall health score, but give additional weight to some of the more objective metrics to ensure accuracy when it comes to your at-risk accounts.

    How to put your scoring system into action

    Congratulations! The most challenging part of creating your health scoring system is done. Now, it’s time to put all of that hard work to use.

    Once you’ve created a scoring system that clearly separates your healthy users from your unhealthy ones, it’s time to create a proactive success strategy tailored to each segment’s unique needs.

    As we mentioned, the exact labels you put on your scoring system can vary depending on the visual format your team prefers. For an example of what your strategy may look like, let’s use a color-coded ranking:

    • Green: Your healthiest users are not to be ignored. Instead, continue to foster a deeper relationship with these customers. Look for ways to offer them new value and, as time goes on, they may become your most powerful brand advocates.
    • Yellow: These customers aren’t necessarily thinking of churn, but the account can go either way. Pay close attention to their usage patterns and schedule a call to understand how you can better serve them.
    • Red: Do not panic. Instead, look back to the goals this account outlined during your earliest onboarding sessions. Go through any existing support tickets, NPS surveys and provide the user with a strategic action plan addressing their concerns to get things back on track.

    The key to using your scoring system successfully lies in creating consistency and repeatable processes. One way to achieve this is to leverage automated playbooks that outline the exact steps a customer success representative should take once a customer falls into a certain scoring bracket.

    Remember to monitor and analyze changes in individual health scores as well as your overall customer average over time. This way, you’ll be able to see exactly how your success strategy is impacting the user experience — and what you can do to improve it.

    Getting your scoring system off the ground

    By setting the right benchmarks for your health scoring system and avoiding making things overly complex, you'll have the clarity and accuracy you need to create a proactive success strategy. And, when you're able to anticipate and respond to user's needs in real time, you'll be well on your way to stronger revenue and long-lasting customer relationships.


    Looking for a customer success platform that takes out the guesswork? Learn how UserIQ can help you create an accurate and powerful health score system.

    Tag(s): Health Scoring

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