Customer Health Score

What is a customer health score?

A customer health score is a value that measures a customer’s engagement and satisfaction with your company and its product or service. It indicates the customer’s likelihood to renew or expand.

Customer health scoring is the process of evaluating a customer’s overall engagement and satisfaction with your company in a single score. Scores are used to gauge a customer’s renewal likelihood. Companies score in many ways, including assigning points, implementing rankings (A, B, C, D), or using a color-coding system (green, yellow, or red), to indicate good, average, or poor health.

There’s often a misguided belief that a customer’s renewal decision is solely dependent upon Customer Success. But the truth is every employee influences a customer’s health score and, ultimately, their decision to renew. By the time Customer Success owns the customer relationship, the customer has already formed a brand and product perception independent of their experience with Customer Success. Even after they establish a trusted relationship, product and support still play a major role in shaping the customer experience.

To learn our seven-step process to build a health score, download our guide: The customer health score handbook.

Three types of customer health scores

There’s no one way to score customer health. The most popular methods include:

  • Points (e.g., 1 to 100).
  • Letter grades (e.g., A, B, C, or D).
  • Color-coding (e.g., green, yellow, red) to indicate a good, average or poor health.

Every health scoring methodology needs a combination of data sources to be an effective KPI. These include marketing automation platforms, CRMs, customer service platforms, and your own product.

How to use customer health scores

Customer Success teams use customer health scores to:

  • Quickly assess account health.
  • Segment customers based on health.
  • Prioritize upcoming renewals.
  • Trigger automated engagement campaigns.
  • Set up proactive alerts.
  • Identify expansion opportunities.

Which data inputs create the most accurate customer health scores?

The most accurate—and therefore the most useful—health scores balance quantitative data (what happened) and qualitative data (why it happened).

If you only pay attention to the hard numbers, you miss insights on customer needs and motives. If you lean too much on subjective factors, you risk inconsistent and narrow reporting. Monitoring both data types gives you a holistic customer view while also identifying conflicting behavior.

For example, a customer may have high product usage while also telling their CSM that they’re interested in features you don’t offer. To see the full picture, monitor customers’ behavior both inside and outside of the product.

To keep an accurate pulse on the customer, your team should log the data points below.

Quantitative customer health score factors:

  • Product usage: login history, time-in app, engagement with sticky or new features.
  • Support history: support ticket volume and duration, SLA issues, severity of cases.
  • Service utilization: consumption of purchased licenses, online resources, and training.
  • Customer loyalty: tenure, customer satisfaction surveys (NPS, CSAT, CES).

Qualitative customer health score factors

  • Relationship quality: responsiveness, affinity, engagement with processes.
  • Team feedback: quality of support/service engagements, CSM sentiments.
  • Satisfaction: perceived ROI, level of customer advocacy.
  • Risk rating: customer maturity, customer fit, competitor risk, feature requests.

Customer health score factors including attributes, usage, engagement, ROI, and external risks

How many factors should a customer health score have?

Aim to have between five to seven factors per health score.

Assign each factor enough weight that if it significantly fluctuates, it impacts the score. For example, if you’re using a 100-point scale, each factor should be at least 10 points and no more than 20 points.

However, there are exceptions to these guidelines when grouping factors. If you want to base 20% of your health score on product usage, consider breaking it down into three separate factors (i.e., one factor per event type) that add up to 20 points.

Do you need more than one customer health score?

The short answer: yes.

A customer’s behavior changes throughout their journey. An onboarding customer’s product usage will differ from a customer in the second year of their contract. Customize your scores and weigh factors based on relevancy to each lifecycle phase: implementation, training, adoption, year one, year two, and so on.

Also, consider factors that reflect customer fit and value, such as such as product type or edition, company size, annual revenue, and industry. For instance, you may have different scoring for SMB customers with a digital onboarding and enterprise customers with a high-touch-onboarding.

Let’s explore two examples of how to customize factors based on lifecycle stage to create a more insightful score.

  • Example one: You create a health score for customers who use Product A and are in the first year of their contract. This score has strict usage parameters for specific features since it’s essential to increase adoption during the onboarding and early adoption phases.
  • Example two: You create a health score for customers who also use Product A but are in the second year of their contract. This score accounts for an overall higher volume of product usage while excluding events related to initial configuration and fine-tuning.

These differing scores reflect different stages of the customer journey. Your second-year customer may only need to tweak automations once a quarter, while your first-year customer can be expected to adjust automations every few weeks as they test and refine.

Assign an account as many health scores as is beneficial.

Example onboarding health score

Customer health score example for onboarding including factors such as license utilization, product usage, NPS.

Resources and tips to sharpen customer health scores

Are you clear on customer health scores? That’s good—it’s down to you as a Customer Success professional to raise them. These tips and resources will help.

  • Always be evaluating health scores. Follow this four-step guide on how to measure the effectiveness of customer health scores. (Hint: if you aren’t reviewing your health scores quarterly, red flags are likely slipping through the cracks.)
  • Customize scoring based on customer cohorts. With an infinite number of ways to slice and dice your customer base, knowing how to segment for maximum impact can be tricky. This smart segmentation guide shows you how to group customers beyond ARR to deliver a more proactive, customer-centric approach.
  • Put health scores to work. Pair customer health scores with Alerts and Plays to automate CSM outreach based on changes in scores. Use this roundup of 12 engagement automations and this guide on getting started with Alerts as sources of inspiration for automation triggers.

To learn our seven-step process to build a health score, download our guide: The customer health score handbook.