What Is Your Customer Health Score Hiding?
Have you ever seen your total cholesterol number? If it’s under 200, you generally feel pretty good about yourself. If it’s over 240 you make an appointment with your physician.
What do you do if it’s in the “borderline” area? Even people with numbers brushing 200 might wonder if they should take action. Is it time for diet or exercise changes? Medications? A physician would order a blood test to look at the components of the total cholesterol number: HDL, LDL, triglycerides. This information would inform the next steps.
Many customer health scores are like that total cholesterol number. Customer health scores typically combine multiple factors that are relevant to customer churn or lifetime value. When you put them together, these metrics lose their effectiveness for spurring action.
How Many Customers are in the Middle?
The aggregate score represents the extremes pretty well. A customer with a very low score needs immediate help. One with a very high score has a low risk of churn.
But if your customer health scores have a bell-shaped distribution, many customers might fall into the gray area between very good and very bad. They could be better, but you don’t know how to improve them.
Same Customer Health Score, Different Needs
Consider a customer health score derived from the following four factors, each of which (for our hypothetical company) represents a potential risk of churn:
· Average percentage of days customers used the service in the last three months (low usage represents churn risk)
· Use of a specific feature strongly related to solution value and retention, within the first three months
· Amount of online training completed
· Overall tenure as a customer (new customers are at a higher risk)
Each metric contributes a maximum of 25 points, for an ideal score of 100.
Two customers show up with a health score of 35 points.
· Used the service 40% of days of last 3 months (10 points)
· Used high-value feature twice in first 3 months (5 points)
· Attended 16 training session (18 points)
· Has been a customer less than 3 months (2 points)
· Used the service 12% of days of last 3 months (3 points)
· Used high-value feature 20 times in first 3 months (15 points)
· Attended 5 training session (6 points)
· Has been a customer for 15 months (11) points
Their customer health scores are identical. When you drill deeper, however, it’s clear that the ideal actions for each customer are quite different.
Customer A is new to the service. The Customer Success team might reach out specifically offering to show the customer how to use the high value feature.
Customer B started strong, but usage has dropped off recently. The number obscures the downward trend. The customer success team should investigate what’s happening and offer additional training to get the customer back on track.
Actionable Intelligence Beyond the Health Score
The value of the health score lies in what you do with it. Using ServiceSource Customer Success powered by Revenue Analytics, you can easily drill down into the specific metrics that make up the overall score. Revenue Analytics surface trends that you need to know about. And you can create specific playbooks based on health scores or customer behaviors. With this insight you can address the needs of the customers with borderline health scores, making everyone happier and healthier.
For more information download our latest brief “From Customer Health Score to Meaningful Action in Five Steps” by clicking here now.