Customer Health Score

Definition

A customer health score is a SaaS customer retention metric that helps companies gauge whether a customer may stick with the company's brand or leave for other brands. This metric is used by business account managers and customer service teams since they can quickly determine if a customer may churn and how likely the churn is.

Example

Customer health scores may vary across industries and also the calculation methods. Here are a few examples that can be used to measure customer health:a. Product/service usage levelsb. Customer satisfactionc. Engagement levelsd. Customer support e. Upgrades and renewals optedCompanies can use any or all of these while establishing a customer health score. The results of this metric highly depend on customer behavior.

Why it matters

Often, a company's customer success teams spend their time responding to customers that keep coming back with problem areas. In this process, the company may end up over-servicing some accounts while neglecting others that have better potential of continuing with the company. Therefore, every SaaS company must establish, monitor, and respond to customer health scores. This can help customer success managers in easier identification and dealing with risk. This metric is also used to identify customer behavior patterns that can be studied early on and a potential churn can be avoided.To improve customer health score, customer service teams must be in contact with customers to find out issues early on and focus on usage patterns to offer enhanced products/services before a customer drops out.

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