What is a Customer Health Score? What is it and how can I use it?

    Aren't those large data-driven companies?

Not necessarily. Each business could benefit from understanding customer health and using a scoring system to get ahead of any potential loss.

We'll go over the meaning of a health score, as well as the advantages from creating one, and various ways to assess the health of your customers. We'll then provide you with a handy template you can modify to fit your needs.

Ready? We're ready to dive right in!

•   What is a customer rating of health?
•   What is the significance of a customer's health score important?
•   Benefits of using a health score
•   How can you use the the health score of your clients in your business

What's a consumer health score?

The health score of a client is a measurement that determines the likelihood of a customer remaining loyal to the company. It's used mostly for retention purposes to allow companies to predict and prevent the churn of customers.

This can contain:

• Usage: How often do they use your service or product?
• Engagement: How involved are they on social media and other channels?
• The Revenue: Are they spending greater or less than what they expected to spend?
• Support request: How many requests have they submitted?

They can also contain anything from customer feedback as well as the amount of time they spend on your website before purchasing. It is the idea of combining various data elements into one unified metric that measures loyalty and health of the customer - it is easy to grasp and keep track of.

Why is a health score vital?

There was a time when businesses could frequently conduct face-to-face meetings with their clients. Before the introduction of the Internet customers' loyalty was mostly dependent on price, service, and proximity. The typical route was to go to the closest supermarket for toothpaste, regardless of the better options available in a city over.

Nowadays, the internet has revolutionized everything. The internet gives customers more choices than ever before and are usually just a few clicks away from switching to another supplier.

It's the most important factor to customers who don't need any roadblocks between them and the purchase. This is now harder than ever for businesses to retain customers with a crowded marketplace.

Enter customer health score.

The purpose of this metric is to determine the likelihood of a client to stick with your business for the long haul before they decide to jump ship and take their money elsewhere. All without ever needing an in-person checking-in.

Benefits of using an individual health score for customers

Using a customer health score can offer you many benefits.

   Early identification of potential churn risk  

Blindly ignoring the indicators of loss can cost you. If you monitor your customers' health score and analyzing it, you'll be able detect any issues that could be causing problems quickly and address the issue before it's too to late.

For example, if your customer suddenly stops connecting to your app the product or service you could explore and offering extra support.

   Retention rate increased  

Saving customers from the brink of leaving is one factor, but knowing a customer's health score can also help you improve the retention rate of your customers. If you know which clients are more likely to stick to the end of the tunnel and enjoy your service or product and the message you send and your services specifically to these customers.

For example, sending out targeted emails with special offers or coupons to customers could encourage more frequent usage as well as engagement, two major indicators of customer loyalty.

   Improved customer experience  

In providing personalized service to every user according to your individual preferences and preferences, you'll have the chance to build stronger relationships with them and increase chances that they'll stay around for longer.

   Increased CLV  

Plus, if you focus on increasing engagement with existing customers, they could be more inclined to spread the word about the product or service you offer by becoming ambassadors, as well as organic marketing agents.

   Forecasting of demand with accuracy  

If you know the health of your customers, you can accurately predict the demand of your customers. This will help you plan for future growth and help you make better choices regarding allocation of resources.

Unpredictable forecasts can slow a business's growth by causing unnecessary inventory investments or resulting in stockouts that may cause inconvenience to customers.

   Improved ROI  

By tracking the health of your customers You can easily determine which customers are most likely to be successful with your service or product and which customers require more support, and focus on giving them the resources needed to offer them the highest return for the investments (ROI).

   Efficient marketing  

Instead of sending general messages to everyone in your database, you are able to focus on people who are that are likely to remain and make sure that each message will be as effective as you can.

How can you use the the health score of your clients to improve your business

You're not sure what to do with a health score in your business? This step-by-step tutorial will help you in making your own.

   Define Customer Success  

Are they:

• Making regular purchases of your service or product?
• Are you logging into your application or website frequently?
• Interacting with customer service or support teams?

   Choose your measurements  

Review-based qualitative measures are useful in specific situations however, it is best to focus on quantitative metrics for the most effective health score for customers system, so that it could be expanded.

This can comprise:

• The number of logins
• Average time between purchases
• The time spent on a application or website
• Social media engagement
• Use of the product
• Online participation
• Support tickets
• Add-ons, upgrades or upgrade options

Customer behavior metrics can help you understand how customers interact with your product or service at any given moment. These can be far more beneficial than conventional metrics such as survey results on satisfaction of customers, which often take longer to produce results and can are influenced by a variety of biases.

   Develop an scoring system  

At this point, businesses could get ahead and begin to immediately designate a status for each customer.

However, the visualization of client health will follow. The first step is to create the numerical method of assigning points for each metric you choose to use.

For example, a customer who checks in more than twice a week might be awarded five points. Those who logs in only once would get no points. By assigning values to each action or behavior it is easy to calculate a score for each customer.

   Interpret the data  

The time has come to change your data from just a jumble of numbers into something that is more important.

The color code allows you to assign colors or labels for each of the scores you have established, for instance green for customers who are healthy and yellow for those at risk, and red for those who are at risk of being churned.

A few companies utilize the system of school grades, with A+ being a customer that will stay for the rest of their lives, with F signifies a customer who is already half way away. A simple scale from 0-100 works well, especially when you have a lengthy client list.

   Customer health score examples  

Here's a visual which you could end up with:

At a glance, you can see the position of each client within your existing customers which ones require attention and which is the most important to your revenue sources.

Due to the fact that Mollie is such a huge buyer, her emergency decline is extremely worrying and requires immediate action. However, Tom doesn't spend much on his own, and consequently, his current decline might need to be dealt with in a timely manner.

   Template for calculating health scores of customers  

Before you go, here's an easy health score for customers template that can help.

The first step is be able to allocate points for the various outcomes. In our example below, a client who utilizes a product for fewer than five hours is eligible for none points for use and those who use the product for more than ten hours will be awarded 100 points.

A person's scorecard might look like this. Through the use of weight distribution you will be able to determine which measure is crucial to the health of your client.

The customer comes out with a 60, but by adding more types (or more specific outcome ranges) You can have the more specific look you want and customize it for the needs of your company.

Conclusion

Health scores for customers are an effective tool to identify clients at risk of being churned. By regularly tracking customer behavior indicators, you'll be able to spot any issues promptly and act prior to it's too for too late.

When you put the right strategy in place, you can guarantee that your customers remain happy - and loyal - for a long time to come.