Customer health score predicts how your relationship with a customer will change in the future and shows you how likely it is that specific customers churn. As we already mentioned before, building a successful SaaS business is not mainly about customer acquisition but customer retention. That’s why your customer health score plays an important role. Even though a prediction will not be 100% accurate, it will help you understand if people like your service and are more likely to upgrade than churn. Having happy customers will not only keep them for your business, but eventually, they will recommend your service to their friends and family, lowering your CAC significantly.
Calculating customer health score starts with identifying the different touchpoints customers have with your business. Product usage, customer feedback, website activity, or usage of customer support are just some touchpoints, to name a few. The goal is to identify all metrics that might have either a negative or a positive impact on customer retention. Keep in mind to only use metrics that help you predict customer behavior regarding the outcome you want to track. Measuring too many metrics for customer health score might dilute the outcome and will not provide you with the accuracy you want.
Once you have identified the metrics that impact customer retention, put those metrics and your customers on a spreadsheet and rate those customers based on those metrics. A good tip is to use segments for your spreadsheet. For example, use a bucket for “Healthy customers”, “At risk,” and for “Requires attention” customers. For instance, if customer A uses your customer support regularly and you see him in the “Requires attention” bucket, improve their experience by having a personal call and helping them achieve their goal.
Once you assigned every customer to your health scoring system, you can better predict which customers are happy and which customers need more support.