Let's say you're driving down the road and the "check engine" light suddenly comes on in your car. So, you drive to the mechanic who tells you that you're "very lucky," because your wheel axle nearly broke. She estimates that if you drove a few more miles on it, it would have likely malfunctioned, costing you a lot more money and potentially causing an accident, too.

In customer service, the check engine light is your customer health score. It measures a customer's relationship with your brand, including how likely they are to remain loyal to you or complete a specific action.

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In this post, let's break down everything you need to know about customer health score. We'll review how it's used, how to calculate it, and even look at some examples you can reuse with your customer success team.

Customer Health Score

Customer health scores help account managers and customer service teams monitor their customer base. It lets them know if a customer is at risk of churn or is losing interest in your brand. When a score falls below a determined threshold, the company can reach out to the customer before it's too late.

Health scores vary by industry and how you calculate them for your company will depend on the customer behavior metrics that you find most valuable. Below are a few examples you can use to measure customer health.

  • Product Usage
  • Customer Feedback
  • Marketing Engagement
  • Website Activity
  • Customer Support Cases
  • Product Upgrades and Renewals
  • Community Participation

Since you can mix and match to your preference, creating a health score is typically a manual process. If you're not sure where to start, let's review the steps you can take to start measuring customer health.

How to Calculate Customer Health Score

1. Define Customer Health.

The first step is to establish a goal for your customer health score. Will it alert you to churn? Will you use it to assess the strength of your customer loyalty program? Or, will you'll leverage it for something else entirely.

You need to determine what your score will represent and how this metric will fit in your greater customer success strategy. Once you have an understanding of how you'll use this score, you'll have a better idea of what type of behavior metrics you should be monitoring to accurately measure customer health.

2. Select Your Predictive Metrics.

With your goals set, the next step is to select the metrics you'll use to evaluate customer health. These are typically customer behavior metrics that signal when a customer is going to perform a specific action. We listed a few of these metrics in the section above.

3. Create a Scoring System.

The next step is to create a scoring system. For example, if a customer returns to your website five times in a week, that should add points to their overall score. If a customer submits negative feedback, that would reduce points from their score.

The idea is to create a system that provides you with an overall score that summarizes the metrics you chose before. If a customer is using your products and enjoys working with your business, they should have a positive score. If they're unsatisfied and thinking about switching to a competitor, their score should alert you to that risk.

4. Segment Your Customer Data.

After your scoring system is set up, take some time to collect data. Test out different combinations of metrics until you feel confident that your scores accurately represent customer perception.

Once you have a sizeable dataset, you can start categorizing your scores. How you segment this data will likely depend on how you want to visualize it, but most companies will use number ranges to separate each group. For example, customers who scored in the top 25% may have a "healthy" score, whereas those who scored in the bottom 25% would be "unhealthy." You can then average the scores in those percentiles to create an overall benchmark to categorize your data.

5. Visualize Your Customer Health Score.

The final step is visualizing your score so everyone on your team can easily determine the health of an individual customer or account. There are a few ways you can do this and the method that you choose will likely be guided by how your customer success team operates.

In the section below, we've listed a few examples of how you can display this metric, regardless of the industry you're business is a part of.

Customer Health Score Examples

Customer health scores can be represented in a variety of different ways. Below are a few.

Percentage Scale

customer-health-score-percentage

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This is a relatively straightforward system that can be used by most businesses. Rather than totaling an overall average, scores are gathered from different categories all holding an assigned value. That way, you can have major events — like a product upgrade — hold more weight than a smaller action.

Color Code

Customer-health-score-color-code

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Color-coding is simple, but effective. This system is easy for employees to interpret and can help you provide fast responses. Timing is everything in customer service and those extra seconds might just make the difference between keeping and losing a customer.

Alphabetical Scale

Customer-health-score-alphabetic

Similar to color-coding, an alphabetical scale assigns a letter to each customer based on their customer health score. The higher their score is, the higher the grade.

Ranking Scale

Customer-health-score-ranking

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Ranking scales organize your CRM by customer health. In the image above, you can see the customer's rank is listed in the far-left column. The column next to it shows how many points the customer's health score has gained or lost in a given time. This is valuable information to have because it can show you who your happiest customers are.

If you're looking for a more organized way to score your accounts, read this customer data platform guide.

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Originally published Jun 5, 2020 8:00:00 AM, updated June 05 2020

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