What is a customer health score?
A Customer Health Score (CHS) acts as a customer sentiment indicator, helping organisations to measure a customer's perceived value of their products and services. A well-designed a customer health score will be made up of multiple data points, leveraging indicators which help to determine the perceived value, which in turn provides a health score. Another key benefits of the customer health score traffic light system is the ability to determine the risk rating for a customer to churn (building out a propensity to leave model).
How are CHS beneficial for marketing?
Similar to lead scoring, the data insights that make up a customer health score will vary between organisations and is largely defined by your organisation’s value proposition and any measurable metrics you have designed as proof points for effective customer adoption and delivery. While implementation of a customer health score can be used in B2C products and services (i.e. loyalty programs, subscription services, etc), the utilisation of the customer health traffic light system tends to be more popular within B2B organisations. The key benefit of implementing the customer health score in a B2B organisation is the ability to track the health of an ongoing business relationship and implement strategies that will improve that long term relationships. This is an essential element of business continuity and growth for organisations that rely on repeat business.
The customer health score metric enables customer success agents to forecast customer satisfaction and engagement in alignment to the customer’s lifecycle stage. The health score, together with an automation program, can trigger tasks, notifications and automated workflows improving operational process. As a result, customer success agents are able to become more proactive and follow up with clients, offer assistance to problems, as well as create a retention play in a more timely manner - reducing the churn risk and deterioration of the relationship.
Measuring and monitoring customer satisfaction as part of the customer health score also enables the customer success team to provide any necessary feedback that can improve product development. This helps to close the product-to-customer feedback loop, using data and insights to allow organisations to better cater to the needs of their customers.
Furthermore, customer health scores are also an effective method of identifying upsell, referral, and resell revenue opportunities. Leveraging product customer satisfaction and endorsement (i.e. incorporating the NPS and CSAT score into the customer health rating) allows you to pinpoint which customers have a higher propensity to purchase additional products and services or participate in a referral program.
How CHS are used and implemented in marketing?
Setting up a customer health scoring system requires a deep dive into understanding indicators for churn and loyalty. Identifying data trends which lead to churn or loyalty will help ensure you are able to extract the relevant data attributes required to accurately measure your customer health rating through the scoring system. Similar to lead scoring, using a scoring system of 100 points will allow you to tally different performance data (such as product engagement metrics, Net Promoter Score (NPS) ratings, Customer Satisfaction (CSAT) ratings, contact frequency and engagement type/outcome etc) using a tally board to group scores into categories including a score breakdown range appropriate to provide indicators for health (i.e. Green, Yellow, Red).
Overall, if one of your core business value propositions includes maintaining ongoing relationships with customers to enable business continuity and growth, then the implementation of a Customer Heath Score will be greatly beneficial. Customer satisfaction is captured through a range of activities including NPS, CSAT and other surveys however the use of that data together with product performance data as well as customer inbound enquiries and engagement through contact centres or other channels (social, website etc) will help you to build a type of propensity model that identifies churn risk, upsell opportunities and more.
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