Customer Health Score. At the point when you start your fledgling business, your smaller customer base is easier to manage and simpler to work with. Working so closely with your important new customer base, itโs easier to understand how they feel about your products and services.
As soon as the amount of customers grows it can be almost impossible to take care of your customers and manage them to a satisfactory level, in order to ensure the growth of your stellar new business. Itโs far more difficult when your business grows to spend as much time on a personal level with your customers and you may miss important signals.
This is the crucial point at which itโs imperative to collate your customerโs health score and make sure youโre taking every opportunity to understand what makes them tick.
So, letโs take a look below at the quick takeaway answer as to why itโs important to keep a regular check on the health of your crucial customer base, then weโll dive into more detailsโฆ
Why do I need a customer health score?ย In a competitive landscape, in order to retain the current customer base and to create the opportunity in which to build on those hard-won customers, itโs important to create a strategy to monitor your customersโ health score. This will ensure effective and consistent growth and less customer churn.
Now weโve seen the short answer as to why all companies should make collecting data on the satisfaction of their crucial customer base an integral part of their strategy, in order to help us understand a little better we will start with looking below at exactly what a customer health score actually is.
What is Customer Health Score?
In its simplest sense, customer health scoring is a way of keeping track of, and scoring customers based on any metrics your business considers important. Itโll also enable you to predict the likely outcomes that will develop with your customers in the future.
Once youโve collated the information, itโs then possible to improve your relationship in order to maximize growth.
Itโs important to understand that each company and business will have different requirements from the health scoreโฆ
For example, one company may want to use the information to predict the level of customer churn, while another may be looking at the likelihood of upselling strategies.
Itโs of course, possible to use the score for a number of different business uses and itโs not necessary to purely think in terms of aย one size fits allย when developing the process.
You might be wondering why you need to monitor your customersโ health and why itโs crucial to your business, so letโs take a look at that.
The importance of customer health scoring
Itโs really important to realize that when your customers are satisfied, their needs are fully met and their expectations are exceeded, they are the definitive marketeers for your business.
According to experts,ย a huge 90% of customers are influenced by positive reviews when buying a product.
When customers experience great customer service or an extraordinary product, there are so many ways in which they can shout it from the rooftops, however, this could also become a negative if you arenโt up to speed with your customerโs health score.
If youโre providing the best service you can, the more likely your customers can give positive reviews and feedback to your next potential customer.
Referrals are immensely powerful when it comes to building or destroying your hard-won customer base. Providing the best customer service, youโre able will ensure that you will not only increase your customer base but also retain your current customers.
Customer health scoring is the key to providing remarkable service. Once youโve set up your system and collected the necessary data, youโll have the important insights you need to address each customerโs issues โ which will bring you the benefits of greater retention, far lessย churn, increased acquisition of customers and overall sustained growth.
So, what makes a healthy or potentially, unhealthy customer? Letโs take a look below.
โโฆwhen your customers are satisfied, their needs are fully met and their expectations are exceeded, they are the definitive marketeers for your business.โ
The healthy and unhealthy customer
In order to work out a customer health strategy that works for your business, itโs important to first understand what it looks like to have a successful or unsuccessful customer.
What is a successful customer?
A simple barometer of whether your customer is successful is if theyโre getting the best value possible from your product or service.
What is an unsuccessful customer?
Simply put, unsuccessful customers can be identified as โat riskโ.
The easiest method of determining which category your customers fall into is simply by monitoring your top customers and also those that youโve lost.
Analyzing this way will give you clear information as to the common traits that are retaining your customers โ or making your customers head off to your competitors! Itโs a great starting point at which to begin your customer monitoring process.
In order to best use the analyzed information, itโs important to begin compiling a list of the specific traits. To begin with, make sure you keep your list fairly short to start with, to ensure that youโre not too overwhelmed with endless data, which can mean making sense of the information much more difficult. So, keep the list short โฆand to the point!
Once youโve identified the characteristics, you can begin with starting to define the key metrics for your health score.
5 best customer health score metrics
Once youโve built up your list of unique customer characteristics, itโs time to look at which customers are healthy or those that are at risk.
Each of your benchmarks will be specific to your own business and the outcomes you want to achieve. Obviously, what is important for one company, will not be as crucial to others.
The way you structure your scoring system will be individual. It could be that youโre mainly looking at customer life cycles, or maybe the size or location of where your business is largely coming from. Once youโve looked at what is most important for your business, you can build in different health scores for each of your chief metrics.
Letโs take a look below at 5 of some of the best and most common metrics used โฆin order to help you build your customer health score strategy.
How much do customers need you?
If your customer feels really connected to you and your product or service, the less likely they are to turn to your competitors.
Itโs really important to look into the types of behaviors that will show you how crucial your offering is to your customersโ life.
If for example, a customer has invested time and energy into integrating their primary business tools into your offering, itโs quite clear it will be far more difficult for them to renegotiate their way through previous technologies in order to start again with a new company.
This measurement will help you in prioritizing your customersโ successful activities.
โIf your customer feels really connected to you and your product or service, the less likely they are to turn to your competitors.โ
Frequency of visit
There are many reasons why customers arenโt logging in every day. It doesnโt automatically mean theyโre filed underย risk.
Itโs important to understand when your offering is required. For example, it could be your service is only required at specific points in the customer journey, itโs seasonal, or even that they may be away on vacation.
Similarly, a customer who logs in every day may not necessarily be using your product in the most effective way of getting the best value from it.
Crucial to understanding your customers is how often they might log in, or visits your store and is a very useful metrics tool to determine your customerโs health score.
Making sure you delve into the context around your customerโs use or their purchasing cycles is important in order to get the most out of your customer health score strategy.
Customer relationships
It goes without saying that the more fans your product or service can pick up, the better. Having a close relationship with all your customers will make sure they remain close. Making sure you know who are the chief purchasers championing your product significantly reduces the risk of losing them.
Making sure you engage in regular conversations with your customers is crucial to building a good business relationship.
Once youโve established a good relationship, any ongoing conversations will give you the ability to flag up any potential regular issues which may not be picked up by your health score metrics.
Make sure you build in a point on your customer health score which takes account of any such conversations so the outcomes can be recorded and measured.
Keep in regular contact with any senior decision-makers, as having a good mix of fans and super users is important as this can significantly reduce the risk of your customers disappearing off to your competitors.
Having support at the ground and also the senior level is important to maintain. As of course, senior members of your customer base will carry extra weight in terms of a companyโs buying choices.
โHaving a close relationship with all your customersย will make sure they remain close.โ
Customer satisfaction
Itโs crucial to consider whether or not your customers are truly using your product or service to its best capacity. As mentioned previously, checking whether they are logging in regularly enough or making additional purchases is important to quantify their overall health score.
Even though a customer may score well on most of your metrics, you canโt automatically presume they are a healthy customer. Using industry-specific tools to measure this, is important to your overall health score strategy.
As you build closer relationships with your customers, youโll begin to understand how they work and be the first to hear of any recurring or other important issues your customers may be experiencing.
Alternative, if the metrics are currently looking particularly positive for a specific customer, make sure you take other factors into account to get the real picture. For instance, they may be expanding or moving premises, so do make sure that the common-sense element and on the ground knowledge is brought into play when evaluating each customer.
Calculating your health score
The exact calculation you use to calculate your health score will be completely tailored to your products and your customers.
A good benchmark to create your health score strategy is to class your customers as:
- Red
- Amber
- Green
Your health score calculations are completely unique to your business and products. Once you have created the benchmarks for a healthy and unhealthy customer it is much clearer to add which metrics are working the best for you and your needs
Red indicatesย at risk, Amber is ok and Green indicates a healthy customer.
How your customers reach each stage can be as simple or as complex as fits with your own business needs. Tools can be used to create formulas for you, or you can work them out yourself.
Remember, even if a customer is red, it doesnโt necessarily mean they are looking at going to your competitors, equally a green flag doesnโt necessarily indicate the perfectly satisfied customer. Make sure there is always a space in your strategy for real-life input by your staff members regarding customer conversations and other human input when working out your customerโs health score.
โRed indicates at risk, Amber is ok and Green indicates a healthy customer.โ
And finallyโฆ
By bringing your health score into your CRM, youโll get a holistic view of your customer as youโll see the score in context.
This will help you to improve the score of an unhealthy customer and give you the ability to be able toย trackย the most powerful impact so you can replicate that experience for your amber and red customers.
A customer health score is always a work in progress. You may find that what works today isnโt relevant in six monthsโ time. Be prepared to change and respond to customer and employee feedback throughout the whole process.
If you need any help or would like to speak to one of our expert team regarding the topic above, doย get in touchย to make sure youโre creating a stellar customer health score strategy for your business.
