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Measuring and tracking customer health is an important and well-established practice. The practice becomes all the more critical in times of uncertainty. While most companies use some form of metrics to determine the health of individual customers, they'd get far more value by expanding the depth of what is measured and the ways that data can be used.

Health scoring is generally referred to as the process of measuring and tracking quantifiable metrics to determine customer health. Qualitative measures are generally not used, although some companies turn the “gut check” of their personnel into a quantifiable metric. Increasingly, health scoring is top-lined into a single red, yellow or green color coding, which can quickly show the overall customer status and also pinpoint exactly where to deploy additional resources.

Customer Health Scoring — In Totality

Some companies refer to the individual factors or measures as health scores, others call them key performance indicators (KPIs). While some organizations see the aggregated score and its associated color as the health score, others see this aggregation as a KPI. Whatever you call it doesn't  matter, it's the concept that counts.

Health assessment should combine a number of factors or measures that together provide a more detailed and accurate analysis of customer health. The depth coming from aggregating multiple factors provides a more realistic picture of the customer and helps avoid misleading evaluations and supports more accurate decision making.

Related Article: How to Measure Customer Experience Beyond Net Promoter Score

What Constitutes a Health Score?

Some of the primary areas that could comprise a health score include sales and CRM related measures, support metrics, engineering or change management issues, usage measures, engagement or interaction metrics, financial status, reference-ability and customer news or changes.

  • Sales and CRM measures might track contract length, days to renewal, new opportunities, number of products or services procured, and more. Each of these can be tracked along a normalized scale and then aggregated to become an overall sales metric that then feeds into an overall health score, or as individual metrics directly leading to overall health. Either way, the metrics can be weighted, so certain aspects count more heavily than others. Ideally, each metric has the same scale (0-10 points is common), but each may have a weighting factor.
  • Similarly, support or engineering/change management metrics may include number of open tickets, total number of tickets, average time to resolution per ticket, number of top priority tickets, SLA breaches, resolution times, etc. Usage measures might involve ways of tracking the total amount of time the customer spends utilizing the product or service, the number of users, the range or breadth of usage (number of features or aspects utilized) and other factors. Engagement metrics include the number of stakeholders your company is connected to — or even know about — in the customer organization, number of meetings or interactions, time since last contact, time since last QBR and others. Financial data might include the number or amount of unpaid invoices, average payment time, etc.
  • Reference-ability, on the other hand, examines factors of serving as sales references or public references, including in the development of reference assets, such as case studies, quotes or webinar participation. Finally, customer news might involve loss of key customer contacts, major business changes or announcements, loss of customer champions, or the merger or acquisition involving a customer.

Of course, there are many factors to consider, the main point is that assessing customer health is a multifaceted matter. The important metrics should be measured, tracked, reported and analyzed, both as individual indicators and as aggregate ones. Together, they can better assess customer health and provide a way to flag customers at risk or those already in trouble. Individually, they can also communicate important measures of how a company is performing with regards to its customers.

Many companies view a customer health score as a measure of individual customer health and the aggregation of these as a measure of how well the company is performing. Both are valid, however, individual components are also highly valuable. These measures could uncover support or engineering issues, product or service usage or best practices for customer interaction. The metrics could be viewed according to regions or geographies to provide more granularity. Similarly, they could be viewed according to industry, product line or type of customer (basic, advanced, etc.).

Related Article: Calculating Customer Lifetime Value Is Tricky

Let Data Drive Expansion and Retention

Companies are becoming increasingly data-driven. Data makes precise and predictable operations possible and better equips companies to deal with unprecedented circumstances. Analyzing data brings clarity and understanding where it previously did not exist, and it enables continuous improvement.

In times of such turbulence, customer health scoring may have direct bearing on the long-term success or longevity of a company. Those companies with established customer health processes should consider whether current assessments might be missing components or need greater depth. Companies should also consider current use of customer health metrics to see if they can better use insights to not only improve customer relationships, decrease churn and drive greater revenue, but also improve or expand other areas of their business.