Customer health scores are vital metrics for any customer success (CS) organization, serving as a North Star indicator of customer satisfaction and value. They gauge whether customers are receiving the expected benefits from products or services, guiding teams from reactive to proactive approaches, and ultimately boosting retention and revenue.
But, how do you know if your scorecard is hitting or missing the mark - and allowing you to drive informed decision-making and facilitate course correction when necessary. There are three steps you can take to evaluate and improve your health score effectiveness.
First, start by assessing your current health scorecard effectiveness. Evaluate if it measures the right parameters and predicts crucial factors like churn and upsell opportunities. Utilizing AI tools can offer insightful evaluations, revealing areas for improvement. Additionally, consider checking out a new AI service that specializes in evaluating the effectiveness of your health scorecard, providing invaluable insights for optimizing customer success strategies. The insights from using this tool have proven to be very telling and sometimes surprising for our customers. For example, we conducted an evaluation with a customer where it was determined that many of their “green” accounts had recently churned. If this analysis shows that your measurements are good, then keep going down the path you are on. If not, then I recommend following the next steps.
Convene a team to identify metrics crucial for customer retention and revenue growth at your organization. Utilize practices like cross-functional round tables, which ensure all voices are represented and foster a truly customer-centric approach. These round tables include key stakeholders from across your organization and can aid in pinpointing key features driving customer success. The main question you want to answer is: “How do we make our customers using our products successful?” Prior to convening this team, you might consider initiating the process by reviewing pertinent research and industry health score frameworks. A good place to start is the Technology & Services Industry Association, which offers valuable insights into industry best practices. Frameworks like Gainsight's DEAR Framework or GitLab's PROVE Framework offer structured approaches to measure customer health. These frameworks emphasize metrics such as adoption, engagement, ROI, and risk, tailored to prioritize aspects most pertinent to your organization. Many of these frameworks lead you to pull similar types of data, so the key is for you to take the bits and pieces from these frameworks that you think will matter the most to your organization.
Once you've determined the metrics and framework, securing the necessary data becomes paramount. Start with readily available data and gradually expand your data sources. Even if some metrics are initially inaccessible, advocate for their importance and seek ways to track them effectively. We work with some companies that use up to 25 measures to determine customer health, but the more inputs you have, the harder it is to untangle and identify what happened. When we get started with customers in our practice, we usually suggest organizations start with five measures.
Maintaining a centralized repository for data documentation ensures clarity on metrics, calculations, and weightings. Consider customizing scores for different product lines or customer segments to better reflect their unique needs.
Optimizing customer health scores demand introspection, collaboration, and perseverance. While challenges may arise, the benefits of aligning metrics with organizational goals far outweigh the obstacles. With dedication and strategic planning, achieving and sustaining success through customer health scores is attainable. Remember, continual refinement and adaptation are essential for staying ahead in the dynamic landscape of customer success.
The author, Kate Griffin, is VP of Professional Services at nCloud Integrators, an industry leader in customer success strategy with a track record of improving customer journeys at hundreds of organizations every year through executive-level strategic services and technical implementation expertise.
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