Health Score Calculation
What is a customer health score?
Customer Health Score is a metric to understand an overall customer or account health, the long-term value of the customer, as well as the health trends for a strategic segment of accounts or the business as a while. Customer Health score takes multiple data inputs including product usage and adoption, license utilization, subscription information, auto-renewal status, business results (NPS), billing history, etc.
A Customer Health Score will change and need to be constantly re-evaluated as the business progresses and metrics change. Also, not all metrics are equally important, and depending on the nature and focus of your business, you need to customize your health score so it accurately represents your business's journey.
Multiple Health Scores
Depending on the types of your customers, you need to have multiple different variants of your health score and can't expect to have a single score that will capture all the different elements.
For example, the parameters and KPIs (Key performance indicators) used to calculate a Customer Onboarding Health Score would be totally different than what it will be for a Customer Adoption Health score which would be different than a Customer Utilization Health Score, etc.
With that being said, there are general markers, metrics, and KPIs which can be used to compute an effective and near-accurate health score that will reflect the actual state of the customers and business results.
Simple Customer Health Score Calculation
A very simple customer health score formula might contain metrics about
- Product Usage and adoption (License utilization, User Activity, etc)
- Billing History
- Number of outstanding support cases (based on severity)
- A CSM sentiment score
- The segment of the customer (SMB, Mid-market, Enterprise, etc)
- NPS (Net Promoter Score)
And depending on your business processes, you can assign different weighting for different components to calculate an overall score.
Example
Let's take 4 success dimensions for our health score calculation:
- Product usage (measured 1-10): 7
- NPS (measured 1-10): 6
- A CSM Sentiment score (measured 1-10): 8
- Outstanding support cases (measured 1-100%): 65% (normalized to 6.5 for simple calculation)
If we assign a weight of 35% to the CSM sentiment score, 25% to product usage, 20% each to NPS and support cases
Customer Health Score = (CSM Sentiment Score * 35 + Product usage * 25 + NPS * 20 + Support cases * 20) / (35+25+20+20)
7.05 (in a scale of 1-10) would be the health score for this particular customer/account based on the dimensions we chose.
At Success4, we provide a very flexible way of computing your health score based on your business markers. You can customize the health score based on your business processes and assign different weights to your KPIs and metrics. And you can assign different colors to indicate Red (High-risk accounts), Yellow (Moderate risk), or Green (Low risk or Healthy accounts).