Product Management 101: Customer Health Score

How do you identify “at-risk” customers so you can give them the additional attention they may need? One way is through calculating a customer health score, a metric aimed at distinguishing thriving customers from struggling ones.

What is a customer health score?

A customer health score is a metric used largely by customer success teams to determine whether customers are healthy or at-risk. Deciding on a scoring system is a subjective process, and will vary from company to company. Regardless, it should help product and customer success teams reliably assess the likelihood that a customer will grow, renew flat, or churn.

Why is the customer health score important?

Often customer success teams feel as if they’re playing defense — they don’t know where they should be spending their time, and, as a result, spend most of it responding to the loudest voices. As a result, they could be over-servicing accounts that are likely to churn anyway, while neglecting those that could be saved or those that could be grown, because they’re listening to the wrong signals.

Establishing, monitoring, and responding to a customer health score for individual users and/or accounts helps customer success managers identify and address risk before it escalates. It also helps them recognize patterns that lead to unhappy customers so that they can mitigate early, whether in the product or through services.

A customer health score is also a useful metric for customer success leaders to share with other internal stakeholders. It’s a useful shorthand for the executive team, the product team, and the larger revenue team.

How do I create a customer health score?

There are many ways to create a customer health score. One popular recipe includes three main ingredients:

Frequency: How much time are users spending in the product? And how often are they coming back?

Breadth: How many users in a given account are using the product?

Depth: How many of the product’s key features are being used?

Based on these, a healthy account is one that has many users who are logging in frequently and using the product extensively. An at-risk account would be one that has few users who use the product sparsely. This would be an indication that the account is probably not getting value out of the product, which should sound the alarm before renewal time.

There are, of course, other actions companies can take to improve customer health. Some will be more difficult to quantify, like the quality of the relationship with the key account stakeholders. Others are more easily measurable, like NPS and feedback.

How can I improve my customer health score?

Speak to customers

Find out what they believe is the root cause of low and shallow usage. It could be that they simply have not been set up with accounts yet, or that they need more training on how to use the product. Either way, identifying the source of their plight is the first step toward helping them.

Identify usage patterns

Is light usage an outlier, or the norm? If it’s the latter, perhaps it’s time to incorporate in-app guides into the product to steer large cohorts of users to success. Or maybe the customer success team needs to consider a new onboarding sequence to introduce users to the highest-value features. Observing usage patterns can illuminate the areas that the product and customer success teams should focus their attention.

Recommended reading

“How to Build a Customer Health Score” by Kristen Miller

Learn how the team at fast-growing security software firm Rapid7 built their own customer health score from the ground up.

“Is It Time Your Customers Got a Health Checkup? (Yes. It Is.)” by Anna Talerico

What metrics should be part of your customer health score? Depending on your industry, size, and company culture, the answer will vary.

“The Pillars of Product-Led Customer Success” by Aazar Ali Shad

You’ve heard of product-led growth, but what about product-led customer success? A product-led mindset can help you improve the overall health of your customer base.

“Why You Are Asking the Wrong Customer Interview Questions” by Teresa Torres

Customer interviews can yield valuable information, but only if you ask the right questions. Teresa Torres of Product Talk shares how our biases get in the way of conducting proper customer conversations and uncovering our product’s real problems.

“Introducing the Product Engagement Score” by Brian Crofts

The product engagement score is a function of adoption, stickiness, and growth, and can be a valuable metric for measuring product performance and customer health.