What Is the Health Score of Customers? And How To Use It

    Aren't those big data companies?

Not necessarily. Each business could benefit from understanding customer health and using the scoring system to stay ahead of potential attrition.

In this article, we'll look at the definition of a customer health score, the advantages in creating one, as well as the various methods you can use to measure customer health. Then, we'll present the template you can modify according to your specific needs.

Ready? Let's dive in!

•   What is a customer health score?
•   What is the significance of a customer's health score so important?
•   The benefits from using a customer's health score
•   How to use the health score of your clients for your company

What is a customer Health score?

The health score of a client is a measure of the probability of a client staying with you. It is used mainly for retention purposes that allows companies to anticipate and avoid customer churn.

This can comprise:

• Use: How often are they using your product or service?
• Engagement: How engaged are they on social media and other channels?
• Revenue: Are they investing greater or less than what they expected to spend?
• Support requests: How many requests have they submitted?

They can also contain any feedback received from your customers, to the time spent on your site before making a purchase. It's the goal of this strategy to blend multiple data points into one unified metric that measures customer health and loyalty - which is easy to understand and track.

Why is customer health score vital?

In the past, firms could routinely conduct face-toface check-ins with their customers. Prior to the advent of the internet customers' loyalty was mostly dependent on price, service and location. You'd usually head to the closest supermarket for toothpaste, regardless of the greater options available in a city over.

Nowadays, the internet has transformed everything. Customers have more options than they ever had before, and are usually just a few clicks away from switching to another supplier.

The convenience of shopping is the most important factor to consumers that don't want any roadblocks between them and their purchases. This is now harder than ever for business to maintain customers within a highly competitive marketplace.

Enter customer health score.

The purpose of this metric is to understand how likely customers are to remain loyal to your business for the long haul prior to when they choose to walk away and transfer the money and go elsewhere. All without ever needing an in-person checking-in.

Advantages of using the health score of a client

The use of a health score can offer you various advantages.

   Identification of early signs of churn risk  

Not paying attention to the indicators of abandonment can result in costly. When you regularly monitor your customer's health score will allow you to identify any potential issues quickly and act prior to it's too to late.

For example, if the customer is suddenly not connecting to your app or product, you can investigate and provide additional support.

   Increased retention rate  

Saving customers from the brink of leaving is a good factor, but knowing a customer's health score could also help you improve the rate at which you retain customers. When you understand which customers tend to stay around and find success with the product or service you offer You can customize the message you send and your services to those customers.

Sending out targeted emails with special offers or coupons to customers could increase their frequency of use and interaction - which are two important factors of loyalty to customers.

   Improved customer experience  

By offering personalized support to every user according to their individual needs and preferences, you'll have the chance to establish stronger connections with them, which will increase chances that they'll stay to stay for a longer period of time.

   Increased CLV  

Furthermore, if your focus is on improving engagement with long-time customers, they might want to help propagate the message about your service or product, becoming evangelists and organic marketing agents.

   Demand forecasting that is accurate  

When you understand the health of your customers You can predict accurately consumer demand. This helps you plan for future growth and make more informed decision-making regarding resource allocation.

Inadequate forecasting could derail a growing business by causing unnecessary inventory investments or stockouts that may cause inconvenience to customers.

   Increased ROI  

When you track the health of your customers, you can quickly identify those customers who are likely to succeed with your service or product and which customers require more assistance, as well as offering them resources that provide them with the best return on their investment (ROI).

   Efficient marketing  

Instead of sending general messages to everyone within your database, you could focus on the people who are most likely to stay and make sure that each message can be as efficient as it is.

How to use customers' health scores in your business

Are you unsure of how to apply a customer health score for your business? This step-by-step tutorial will help you in developing your own system.

   Define Customer Success  

Are they:

• Making regular purchases of your service or product?
• Logging into your app or web site frequently?
• Engaging with customer service or support staff?

   Choose your metrics  

Review-based qualitative measures are useful in specific situations, but you should focus on quantitative metrics for the most effective health score for customers system that can be expanded.

This may include:

• Number of logins
• Average time between purchases
• Duration spent on the application or website
• Social media engagement
• The use of products
• Online participation
• Support tickets
• Add-ons and upgrades

Customer behavior metrics can provide insight into how consumers react to your product or service in real-time. It can be much more useful than traditional metrics like survey results on satisfaction of customers that can take a long time to get results and could be influenced by biases.

   Make a scoring system  

Most of the time, at this point, businesses could get ahead and immediately start to designate a status for each of their customers.

The visualization of the customer's health comes next. First, you should develop an algorithm that allocates points to every metric that you select.

A customer, for instance, who logs in more than twice a week may be awarded five points. A customer who only logs in once gets none. If you assign a value to every activity or behavior and calculating scores for every customer.

   Define the data  

Now comes the time to transform the data from a pile of numbers into something important.

It is possible to assign color or labels to any of the scores you've established, for instance green for customers who are healthy and yellow for those at risk or those at risk of becoming churned.

Some companies use the school-based grading system which has A+ as the type of customer that is likely to stay for a lifetime, and F being one already halfway out the door. A simple scale from 0-100 is a good choice, particularly for companies with a long client list.

   Customer health score examples  

Here's a diagram that you may end up with:

At a glance, you can see how each customer ranks among the current customers, whom you should pay attention to, and the one that is most crucial to your revenue sources.

Because Mollie is such a huge purchaser, her sudden decrease is very worrying and needs immediate attention. But, Tom doesn't spend much on his own, and so his recent decline might need to be dealt with in a timely manner.

   Health score for customers template  

Before you leave, check out this an easy health score for customers template to help.

First, you'll have be able to allocate points for each range of outcomes. For instance, in our example below, a client who utilizes a product for fewer than 5 hours will earn none points for use in comparison to one who uses the product for more than ten hours will earn 100 points.

An individual's scorecard could look something as follows. With the help of weight distribution, it is possible to rank which metric is most important for your customer health score.

In this case, the customer is given 60. However, by adding more types (or more specific outcome ranges), you can get a more detailed look and tailor it to your business.

Conclusion

Health scores for customers are a valuable tool for identifying customers at risk of churning. If you monitor your customers' behavior regularly and metrics, you'll have the ability to identify any potential issues immediately and address the issue before it's too to late.

If you have the proper system in place, you can ensure that your customers stay satisfied - and loyal for a long time to come.