What is a Customer Health Score (CHS)?
A customer health score (CHS) is a numerical value that represents the overall health of a customer. The CHS can be used to help prioritize customers for engagement and intervention, and to track the progress of individual customers over time.
There are many factors that contribute to a customer’s health, including their interactions with your company, product usage, support interactions, and more. The CHS is a valuable tool for customer success teams, as it provides a single view of health that can be used to identify at-risk customers and take action to improve their experience.
In this post, we’ll take a closer look at what a Customer Health Score is, what it means, why it’s important, and how you can improve your CHS over time.
What is a Customer Health Score (CHS) and why is it important?
A customer health score is a metric that measures how likely it is that a customer will churn (i.e. switch to one of your competitors, cancel their subscription, or stop using a product, etc.). There are a variety of ways to calculate a customer health score, but generally it is based on a combination of factors such as engagement, support tickets, feature usage, and more.
A customer’s health score is important because it can be used to predict churn and take action to prevent it. For example, if a customer has a low health score, a company might reach out to them with targeted offers or discounts in an effort to keep them from cancelling their subscription.
Health scores can also be used to segment customers based on risk. This allows companies to focus their resources on the customers who are most likely to churn, rather than trying to prevent all churn equally.
How do you calculate CHS?
There are a number of different ways to calculate customer health scores, but they all share the same goal: to identify which customers are at risk of jumping ship.
One common method is to use a combination of engagement, support tickets, and feature usage. Another popular method is to use machine learning to predict churn based on historical data.
Ecommerce businesses might use data such as whether customers’ orders are increasing or decreasing in value, and how often they are placing orders. If your CRM is integrated with your live chat facility, you can gain plenty of insights this way too.
Software and app companies find CHS scores particularly useful. In this case, they often use a variety of data points from the products themselves – for example, in-app surveys, product usage frequency, whether the user is upgrading the software or purchasing add-ons, etc.
Which method you choose will depend on your specific industry, data, and your business goals. But no matter which method you use, the important thing is that you are constantly measuring and monitoring your customer health scores so that you can take action to prevent churn early.
What factors impact Customer Health Score?
There are a number of different factors that can impact customer health scores. Some common ones include:
- Engagement: How often are customers using your product or service?
- Support Tickets: How many support tickets have been created by a customer?
- Feature Usage: Are customers using all of the features of your product or service?
- Churn History: Have customers churned in the past?
- Customer Lifetime Value: How much revenue has a customer generated for your company?
These are just some of the most common factors, but there are many others that can impact customer health scores. It’s important to experiment and find what works best for your business.
What is a good Customer Health Score?
There is no one-size-fits-all answer to this question. The definition of a “good” customer health score will vary from business to business. In general, though, a good customer health score is one that is consistently trending upwards.
It’s also important to compare your customer health scores to those of other companies in your industry. This will give you a benchmark to measure against and will help you set goals for improvement.
How can I improve my Customer Health Score?
There are a number of different ways to improve customer health scores. Some common methods include:
- Increasing engagement through marketing campaigns or targeted offers
- Reducing support tickets by improving the quality of your product or service
- Increasing feature usage by simplifying your product or service
- Reducing churn by offering discounts or other incentives
- Improving customer lifetime value through upselling or cross-selling
Again, it’s important to experiment and find what works best for your business. But by taking these steps, you can start to improve your customer health scores and reduce churn.
Now that you understand how important Customer Health Scores are, finding a way to measure and monitor them is your next challenge! If you’d like some assistance, our customer experience team is here to help. Reach out to us today and we’ll help you get started!