You’ve onboarded the customer, took him through the entire process and your customer has started using your product. Great! But your job is not done here. You need to check how well they are profiting from your product. And this is where customer health score come into the picture.
At every stage, you need some kind of a health score to evaluate the status of the account and decide how you would engage with the account to take it ahead in the journey. Any changes in the market, like trends and customer usage, may also require revisiting the customer health score.
There are several benefits of revisiting the formula of health scores.
Conversely, survey results have revealed that 26% never update their customer health score algorithm. Nearly, 48% update their customer health score algorithm annually, while 26% update the health score algorithm on a quarterly basis.
Who Is Using a Customer Health Score?
According to the survey results, The health score is more common by 7% in companies that have more than 100 customers. And Companies, where CSMs manage less than 60 accounts or less.
Customer Health Scores are more Popular in High Touch Engagement Models
High-Touch engagement requires human intervention. Here, the customer success manager is dedicated to help high- touch customers achieve their goals. High-touch digital engagements will more often be personalized for the customer.
A survey shows that Health Scores are more prevalent in companies with a more frequent client-CSM touchpoint cadence.
Impact of a good Health Score
Now you’ve designed your Health Score effectively and used it as intended. But how these well framed scores are affecting your business? Let’s take a look into that.
# Increased Customer Retention
A good health score indicated happy customers. And happy customers are likely to stay for you as long as they achieve their desired outcome. Hence churn decreases and retention rate increases.
It was found that 46% maintain a customer health score to forecast churn or renewals. Contrarily, only 1% of companies only maintain customer health to benchmark against a best-in-class customer and overall ROI.
Suggested Reading: 6 Exclusive Hacks To Accelerate Customer Retention For Your SaaS
# Increased Customer Value
Health scores provide you with great signals of what has to be improved. You do not want to wait too long to act on these signals. Taking necessary steps will save you from the risk of your customers progressing down a negative path in the partnership.
# Increased NRR
While keeping customers is great, growing them is even better. If you design and leverage your Health Score effectively, your team should be able to identify strong signals of product usage and adoption, which can lead to growth discussions and increased NRR.
# Increased Advocacy
According to Harvard Business School Press, “Just a 12% increase in customer advocacy can bring 200% growth in revenue for companies”.
Identifying successful customers through your Health Score fills your Customer Marketing pipeline with strong referrals and individuals willing to partner with you.
Suggested Reading- Best practices for configuring a customer health score
Some Customer Health Score Trends
- 44% of companies haven’t been able to implement health scoring for their customers successfully.
- 79% track their health score using customer success software whilst 14% still use spreadsheets.
- Only 30% of businesses changed their health score based on changing business conditions.
- Maintaining a health score is more predominant in organizations with a lower than 5% gross churn rate.
- The health score is more common by 31% in companies with a large customer success team
Suggested Read Customer Health score template