How to Calculate Customer Health Score

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Last year, I spoke at an industry customer success (CS) conference about creating simple and effective health scores. Accordingly, I developed a "recipe" for effective customer health score creation.

The following seven focus areas ("ingredients") can be applied to any customer type, vertical, or segment, from B2B to D2C, from midmarket to enterprise. Depending on your business model, you may not need or have access to them all, but, as your business changes, they may all become useful.

An important element to add: the best customer health scores are shared, so if you can store your score in a CRM or similar system, it will improve its visibility for your team. That may also require some documentation and socialization of how the health scores are determined, as well as what they mean.

1. Customer Success Manager (CSM) Sentiment

This is an early metric most companies can harness with little to no effort, and it is high-impact. If you have CSMs engaging with customer accounts, they will know something—and sentiment can be important in triggering action.

At my company, we log this metric weekly, or any time a CSM notes a change in sentiment, to allow it to influence the health score immediately.

Note: This may not work for scale CSMs, as they may not have unique insights into all of their accounts.

2. Customer Sentiment

This is the data from your survey program. Are you gathering Net Promotor Score (NPS), or other data?

There is debate on how valuable NPS is, but I contend it has a place in health scores. It is a point-in-time measurement, though, so consider its context in the bigger picture.

At my company, we bring in NPS and customer satisfaction scores (CSATs) from our CS tool and integrate them into the bigger account picture.

3. Engagement

How engaged are your customers? Are they attending meetings? Responding to emails? And more important, are they paying their bills?

An engaged customer is an informed customer, and no matter how busy your customers are, if they want value from your product they will show up. You can also consider whether your engagement model is working or needs to be tweaked.

At my company, we track engagement with meeting logs, CRM, and finance integration, for example.

4. Advocacy

Would your customers advocate for you? That is the ultimate question. It's not "Will they reference you," but "Will they speak well of the tool they use in casual conversation?"

An advocate can be quiet (i.e., no interest in being a case study) but still immensely valuable in the long term.

My company tracks advocacy using Salesforce (manual entry at this point), but such data can also come from your customer surveys.

5. Product Adoption—And Use, if Possible

When I started in CS, we didn't have usage data. But thankfully times have changed for most.

Usage data is useful no matter what it is, but sometimes you need to take time to understand what has an impact and what else you may need.

My company tracks product use using our product and also using events from our CS tool.

6. Business Results

Are your customers achieving their goals? If not, they are not receiving business value.

If customers set off to integrate with a tool and then abandon the process midway, you need to know why and what the long-term impact will be. Ask, and assess goals during reviews, using KPIs and tools to track outcomes.

This is also a critical area for expansion opportunities to emerge, so understand it well.

7. Support Health

Support health is new to our score. In most organizations there are admins and users, and they are not one in the same.

At my company, we realized we needed to pulse our users—not just through NPS but through support tickets as well. Some possible measures are volume during a set period and urgency during a set period.

Support health, if overlooked, can lead to some tricky situations. My company uses our support ticketing tool to bring this data in.

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If you are lucky enough to create a connected ecosystem of data and health scores, good for you! And if you are just building this out in a spreadsheet tool, I say good for you as well. However, waiting to understand how your customers are faring is not recommended.

Even if you use only one form of measurement, start now. How else will you understand risks or possible expansion opportunities? Health scoring is something to start doing. Choose a simple health scoring method and iterate the recipe that best suits your business.