How healthy are your customers? If that’s difficult to answer, it could be because you’re not tracking customer health scores. Just 42% of customer success teams do, which means the majority have neglected a major source of potential growth.
Customer health score metrics provide an objective way to measure the strength of your connection to every client. Businesses use them to make more informed customer care decisions, which can improve retention. Your company can leverage health scores to achieve similar goals.
What Is a Customer Health Score?
Health score is a metric that companies use to measure the loyalty of their customers. A higher health score signifies a more loyal client, while a lower score means the client is at risk of being lost.
However, there is no one-size-fits-all calculation for customer health scores. Each company has to define its own measurements for loyalty, and then uniformly apply them across all clients.
Why Measuring Customer Health Is Important
It can cost up to five times more to acquire new customers than to retain current ones. That alone makes client retention worth investing in. Customer health scores can be a very useful customer retention strategy.
They provide an objective metric for measuring how likely a customer is to walk away from your relationship. That gives your customer care teams the information they need to decide how to best allocate their time.
For example, a SaaS company may measure platform login frequency to calculate its customer health scores. It could then direct more customer service attention to clients who aren’t logging into the platform as often.
Think of it as problem-solving before the issues can get to the point of driving cancellations.
How To Calculate Customer Health Scores
Calculating customer health is an inexact science. It’s not always clear which metrics best indicate whether a client is at risk. That’s why every company has to choose its own customer health score template with metrics for measuring customer health. Choosing the right metrics can be tricky.
However, there are commonly used health score metrics, which may be a fit for your company.
Customer Onboarding Metrics
An effective customer onboarding process can reduce churn by up to 67%. That means one way to evaluate customer health is to measure how satisfied clients are with your onboarding assistance.
Clients who aren’t engaging with your onboarding platform may be at risk. The same is true for customers who take longer than average to complete their onboarding. Other metrics, such as time spent on your onboarding platform, can also be useful.
The key is to figure out which customer onboarding metrics are the best predictors of whether a client is at risk. You can do those calculations yourself. But it’ll be much easier with an onboarding platform like OnRamp that can automate some of your data tracking, recording, and analysis steps.
Product Usage Metrics
Product usage is another logical way to measure customer health. Clients who use your software frequently are likely to find it more valuable than those who rarely do.
The question companies have to answer is which product usage metrics are the best predictors of client health. It can vary based on the nature of your product, but some examples include:
- Total time spent with your product
- Usage frequency, such as the number of logins over a specified period
- Adoption rate within an organization (especially for B2B clients)
- Feature usage by breadth or frequency
Net Promoter Score (NPS)
Used by two-thirds of the Fortune 1,000, NPS is one of the most popular measurements for customer success. It asks customers a single question: “How likely are you to recommend us to your friends and family on a scale from one to 10?”
You classify customers based on the score they give as detractors (0-6), passives (7-8), or promoters (9-10). Then you subtract your percentage of detractors from your percentage of promoters to get your net promoter score.
For example, imagine 50% of your respondents are promoters and 30% are detractors. Your NPS would be 20%.
Customers who are promoters for your brand are likely very loyal customers. Those who are passive are less loyal, and those who are detractors are at risk. You can use this information to direct your customer service efforts and improve retention.
Customized Health Score
Customer health scores help companies assess the probability of losing a client. But there’s usually more than one metric that determines those odds.
For example, when assessing a customer’s loyalty, you might want to see their NPS score and product usage statistics. Maybe they’re not a promoter of your brand, but they use the product daily and seem to get value from it. This could change your perception of how likely you are to lose the customer versus looking at their NPS score alone.
That’s why you might also want to create your own customized customer health scoring system. You can weigh all the factors you consider, and then translate them into a single score.
This brings more information into your evaluation process, which can reduce errors and help you make better decisions.
Using Customer Health Score Metrics To Drive Retention
Once you’ve decided how to measure customer health within your business, you can start using that new stream of data to boost retention. The best ways to do this will depend on your company’s goals and the insights that measuring customer health reveals. However, here are some ideas for leveraging customer health scores to get you started.
Test New Strategies
First, you can use client health scores to measure the impact of customer service operational changes. For example, maybe you want to try a new onboarding platform to see if it will positively impact customer health.
You could figure that out by measuring average customer health before and after the change. If you don’t see the improvements you want, that could be a sign it’s time to look for another solution.
This makes it easier to iterate through ideas quickly until finding the ideal solution for your business and its retention goals.
Solve Problems Proactively
You can also leverage your new customer health scoring system to find and solve customer problems faster. This gives you the opportunity to fix issues before they lead to cancelations and impact the company’s bottom line.
The best way to do this is by looking for patterns in your scoring data. For example, you might track product usage statistics as part of your customer scoring system. This might reveal that 70% of customers who cancel don’t log into your platform the week before they cancel.
That could prompt you to reach out to customers via email when they haven’t logged into the platform after five days. Some clients may still cancel, but at least you get the opportunity to make a final pitch to them this way.
Engage Your Most Loyal Customers
Finally, customer health scoring also reveals your most loyal customers. Businesses can take advantage of this in several ways.
For example, you can send an email to customers with the highest health scores to see if they’ll leave reviews for your product online. You could also launch a special referral program for these clients to see if they can help you bring in more business.
It may even be helpful to interview some of your most ardent supporters. This can help you zero in on the specific things your company gets right with its most loyal clients.
Improve Customer Health With Better Onboarding
There’s an old saying that you only get one chance to make a first impression. The same is true for companies and their clients. If you don’t nail onboarding, you start off every relationship on the wrong foot.
That’s why it’s worth considering if a new onboarding platform is right for your business. OnRamp gives you tools to personalize the experience for every client while automating labor-intensive tasks. We even help with data tracking and analysis.
But don’t take our word for it. Sign up for a demo to get a first-hand look at how OnRamp can support your organization.
