Oct 5, 2022

Read Time 4 min

The four-step blueprint to build a customer health scoring program with Valuize Chief Client Officer Emily Ryan


This is a guest blog contributed by Emily Ryan, chief client officer at Valuize, a B2B consulting company that helps industry-leading technology organizations supercharge their customer lifecycle to drive best-in-class net dollar retention.

In times of economic uncertainty, customer churn is one of the top operational risks facing any subscription-based company. While it may be tempting to resort to Hail Mary tactics (such as deferred payments and discounts) to reduce churn, you must instead focus on sustainable and scalable retention strategies. The solution: a robust customer health scoring program, one of the core competencies in Valuize’s ValueXperience framework.

By operationalizing a customer health scoring program, you can proactively prevent churn, drive net dollar retention, and succeed in a volatile economy. Here are four steps to get you started.

1. Define what customer health looks like for your business

The foundation of an effective customer health scoring program centers on your ability to answer this fundamental question: what does a healthy versus unhealthy customer look like? You must define what account health means for your organization, based on your overall business goals, before you can create a meaningful health scoring program.

Start by identifying the key habits of healthy and unhealthy customers. With a shared understanding of health indicators, your team can look at a scorecard and immediately recognize whether the customer is liable to churn, likely to renew, or a candidate for an expansion opportunity.

To get an idea of what a healthy customer looks like, analyze the following elements to spot patterns. While the specific selection of metrics will be unique to your organization, here are some areas in which to begin your analysis:

  • Product usage, along with the depth (the number of licenses customers have) and breadth (the percentage of product features customers use) of usage
  • Usage of your product’s differentiating features and activity in the product
  • Growth of the account and potential to grow
  • Length of the relationship
  • Volume and criticality of support tickets

2. Determine your predictive signals of customer health

With the vast amount of data at our fingertips, it’s tempting to measure everything. To create an actionable scorecard, you need to collect the most relevant metrics. Ask yourself the following questions to assess a metric’s suitability:

  • Is this data statistically significant? Determine if the information tells you something unique about the customer and indicates whether they are doing well or poorly.
  • Can I do anything about it? Remove metrics you can’t influence from your roster. If you don’t, all you’re going to do is raise red flags that put everyone on high alert about something they cannot control.

If you’re in the early stages of building a health score program, selecting the right metrics may require some trial and error. Begin with a hypothesis about what you think moves the needle for your customers. Test those factors to see if they reveal the outcome you’re trying to glean, such as churn. As you collect more data, you will be able to select the most accurate metrics for your scorecard. Regardless of whether you have a basic or more advanced scorecard, you will need to update your metrics regularly as your customers and your organization continuously evolve.

3. Build an actionable customer health scorecard

Make your insights actionable for your team by consolidating them into an easy-to-digest scorecard. We recommend including the most important metrics across four key categories:

  1. Engagement health – Does the customer respond to their CSM or digital outreach? Do they access training or educational resources?
  2. Product usage and adoption – Is the customer engaging in ways that align with their use case, and are appropriate for their lifecycle stage?
  3. Lifecycle stage – Was the customer’s onboarding bumpy or slow? Do they continue to use “future speak,” describing the ways they want to use your product next?
  4. Customer value and customer perception – Has the customer progressed in their adoption journey and Customer Success plan? Did they provide high CSAT and NPS survey results?

The key to making your scorecard valuable is to develop a customer health score scale. There are many methods of weighing your customer score, but the most common include all-or-none, side-by-side, or weighted scoring.

4. Operationalize your customer health scorecard

The most accurate scorecards are rendered meaningless if they aren’t operationalized in an easily accessible dashboard. By using a dedicated Customer Success platform, you can automate the calculation of your health scores and trigger a process that addresses a certain score, such as a churn mitigation workflow. This will not only make your CSMs’ lives easier, but it will also boost their ability to engage with customers in a way that maximizes product value.

Building an impactful customer health scoring program is the most sustainable way to mitigate risk during times of economic uncertainty. Empower your team to counteract churn and put customers on the fast track to retention and expansion by giving them the insights and tools to proactively identify behaviors and patterns of at-risk customers.

Now that you’ve had your health score primer, get a more in-depth look at how to create, operationalize, and optimize customer health scoring in your organization with Valuize’s “The ultimate guide to advanced customer health scoring.”

And a word to the wise: the first time you create a customer health score, it’s unlikely that you nail it. That’s to be expected, and where the finetuning comes in. Learn how to recalibrate your health scores to sharpen your forecasts in our article, “How to measure the effectiveness of customer health scores.”


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