In an ideal world, you'd have zero churn. In an ideal world, I could also eat donuts all day and stay perfectly healthy. Sadly, we don't live in an ideal world and I can't eat donuts all day—and neither does any product have zero churn.
But that doesn't mean you shouldn't strive to prevent churn. But customers often hit you out of the blue. One day you were excited about the MRR coming in every month, the next they email you about cancelling their contract. Maybe there were things going on that you didn't know about?
It’s like the old saying, “I wasn’t sick until I visited my doctor.” Just because you don’t know there’s a problem doesn’t mean it doesn’t exist.
And this adage applies just as much to your customer base as to your medical records.
Customer health scores allow us to study our current situation, predict rising trends, and plan for the future.
We’ll define the customer health score, metrics to help us understand it, and how to use it to decrease churn and build long-lasting customer retention. By the end of this article, you’ll have a game plan to improve product adoption and onboarding, and grow your app.
Defining customer health scores (and why they’re lifesavers)
The customer health score is the metric that helps define how likely a customer is to leave your platform. It highlights how to prevent churning for at-risk users and build better retention.
The score helps understand key insights like customer satisfaction, engagement, and retention. Customer health score combines chosen metrics and key performance indicators (KPIs) that help best define health for your unique SaaS, audience, and industry.
Remember that week where, seemingly out of the blue, you felt terrible, and your body just couldn't do the things anymore?
Then, it dawned on you. It was months of putting off your doctors' visits and not taking care of yourself that landed you on bed rest and prescription meds.
You survived that week, thank goodness. But wouldn't you have liked to know how to prevent that health scare instead?
That's the value of a health score.
SaaS companies' primary issue with customer health scores is what to do with the metric. Knowing which customers are slowly abandoning your product is valuable, but it’s not helpful if preventative improvements aren’t made.
Not only is it essential to implement a customer health measurement plan, but you need your own definition.
Every company is different. Many metrics and KPIs help define customer health, and choosing the most relevant measure of success is critical to meeting—and exceeding—your specific goals.
The anatomy of a healthy customer relationship
You might get tired of carrying around a copy of the classic medical book Gray’s Anatomy. It’s as thick as your palm.
Unless you're a pro reader, you’re more likely to knock out a home intruder with it than to finish the whole volume. Thankfully, the anatomy of customer relationships doesn’t have to be that complicated.
It comes down to human relationships. We can create a better onboarding and customer experience by becoming students of social needs.
Teams analyze customers through behavior and feedback. We then assess our product challenges through these two mechanisms and iteratively improve for a better user experience.
The first steps in building (or repairing) these relationships are defining, collecting, and analyzing relevant metrics.
Time for the mega vitamins: Metrics for a robust health score
How to understand a customer churn rate like your uncle on the dance floor
The first thing that might come to mind is your churn rate. It helps you assess the immediate threat to your retention rate, answering the most crucial question: who’s leaving the app? From there, it’s critical to investigate the why, which will help you improve your overall score.
How do you define churn? Universally, businesses calculate churn as the percentage of people no longer subscribing to your app in a given period. But that might look different for you, depending on your business model.
For example, consider factors in your business model like providing freemium services or free trials. These differences may affect how you want to define your rate.
The churn rate formula looks like this:
(Customers that left ÷ total customers) * 100 = churn rate
Putting customer survey results into hyperdrive
Another relevant metric when understanding your customer base is feedback-based statistics.
You can include surveys that have ratings. These in-app surveys help customers define how they feel. Besides studying their actions, this is some of the greatest insight you can collect on customer preferences and needs.
While it can be challenging to gauge, you should include short-answer opportunities. Customers get to fully express themselves—and you can catch any explicit risk of churn or frustrations that are developing on your app.
Timing is also critical. Ensure you are getting feedback from all stages of the customer journey. The insight you get from new customers, loyal customers, and at-risk users will vary and offer comprehensive feedback.
Study your support tickets (opened and resolved)
How many support tickets are customers opening? How quickly do they get resolved? What are their feedback responses to how the issue was resolved? These three questions are vital to understanding your customer relationships and product adoption.
Here’s a quick breakdown of each question:
How many support tickets are customers opening?
At face value, you can discern whether there is confusion about your product.
For example, if people consistently ask about starting a new project board on your app, that’s a sign you must reevaluate the customer experience.
You can also get a snapshot of customer satisfaction. What is the overall tone of their feedback? Are users frustrated or considerate? In the world of customer service, getting a loose cannon complaint isn’t unusual. But if it’s most customers, you might have a bigger problem (and the nurse is calling a “code blue”).
How quickly do support tickets get resolved?
Investigate ticket resolution rates—and if they match your resolution service-level agreements (SLAs). If there are delays or unproductive back-and-forth communication, it can tell you a few things. Your customer support department needs a revamp, or your product experience needs to be clarified. You can navigate these areas of opportunity by improving the product, adding more helpful resources, and creating better customer service experiences.
When it comes to a numerical unit for measurement, a great starting point is comparing how many tickets are opened vs. how many active users you have.
What are their feedback responses, and how was the issue resolved?
Finally, consider common concerns and how you can eliminate them. Also, evaluate how each issue was handled and if the customer was satisfied. Each customer will leave with a good or bad experience, which will reverberate as they continue to use your app or lose interest.
Customer engagement and website visits
We all want users to enjoy our app. But they don’t like it when we sound like the lonely kid at recess. The best way to kick-start engagement is by identifying opportunities early.
Explore how customers are engaging with your product now. There are a few metrics you can consider. One is the onboarding process. Evaluate if users are completing the entire process, if they abandon it, or if they do onboard, but leave your platform after a short period.
Customer engagement is vital because it helps build better experiences and loyal customers. To create more engagement, you can improve your product experience, nurture a customer community that exudes your brand culture, and find other ways to communicate and build customer relationships.
Adding tier upgrades and renewals
Upgrades and renewals are another great way to measure customer health scores. If customers are happy with your product, they are more likely to pay for more services or continue their subscription as-is.
Your upgrade rate should be a high-value metric. It means users see the value in your product and want more. The renewal indicates if customers are happy with what you provide. You can use both metrics to improve your product and add more features to satisfy customer needs.
Getting that neighborhood gossip: External ratings
When was your last dinner party? Maybe it was a family gathering. You ask your aunt how she likes your new jeans; she smiles vaguely and says she loves them.
Five minutes after you leave, your aunt can’t help but wonder aloud how you go out in pants that look ripped to shreds. Can you afford real pants?
Aunty might have missed the point, but you can’t afford to (even if your holey jeans were $500).
People are much more open on other platforms. They aren’t reserved and are more likely to say the ultimate (and sometimes exaggerated) truth about your platform.
You should include other reputable sources for your customer health score.
For example, depending on your industry and target audience, Google, Product Hunt, TrustPilot, Facebook, and other platforms could provide useful insights.
You can quickly get an average score of several ratings if they are on the same rating scale (like five stars).
Remember that it’s the average of platform ratings—not the average of all reviews added together in one pool:
Social listening: Who’s there?
Future users are listening online. And you should be too—like the kid in the front row of class raising his hand at every question.
Social listening is when companies monitor what other users say about their product through social media. It’s a great way to gather a consensus about your product's value and ways you can improve.
Often, customers prefer to air their thoughts to peers instead of you. But that doesn’t mean you have to miss out. You can consult platforms your customers frequent, like LinkedIn, Facebook, Instagram, TikTok, and X.
This feedback can help shape your customer health analyses.
One way to make this a numeric metric is by evaluating the top 50 posts in a certain period. Create a system that categorizes positive, mixed, and negative takes. When you add up the hundreds of posts between platforms, you’ll get a litmus test of what most people feel.
Where the rubber meets the road: Product usage
What people say is important. But what they do reveals more.
Are users using your product?
Take time to define how you want to establish this metric. For example, is it the amount of time users spend on the platform? If they log in daily? Or if they use the core features? It’s likely a combination of metrics.
Ultimately, you want customers to love your product. If they don’t, you lose them. The best way to know how valuable your app is is by knowing if your product is being used the way you intended on a consistent basis.
You’re not a fortune teller (but you can look like one): How to measure customer health scores
How do you interpret scores?
We know customer health scores vary. Once you’ve defined what your score should include, track them as percentages or in other quantifiable formats.
Then, establish your benchmarks for how you want to improve. Once you have these components, convert all your metrics into percentages. From there, you should have your ideal percentages and can compare them to where you want to go.
Whether you place these percentages into a visual chart that highlights each metric in a holistic view, or consolidate several data points into a single health score, you should know the macro state of your product adoption.
Depending on your CRM and other tools, you can also create scores per user. For example, if you want to measure daily users for new features, you can have a rating system that helps track each person. You can study how it affects their overall retention, and it can provide insight on how to improve.
All these scores and interpretations can be effective, but they can be messy without the right systems and organization—costing you potential improvements and insights.
That’s why tracking scores on the right platform and implementing effective strategies is essential.
How one company changed its narrative with a customer health score
Vecna Robotics, a material handling automation company, wanted to increase satisfaction for renewals, predict issues, and get a better gauge on its customers so it could improve. Through a partnership with a consulting firm, Customer Obsessing, they strategized on a customer health score plan.
If the company wanted to strengthen its offering and customer relationships, it needed the right metrics. The CHS would define those KPIs and combine them to better understand where the company is positioned and how it can improve.
The companies identified some of these metrics as NPS, fleet health, and overall equipment effectiveness (OEE).
(Source: Customer Obsessing website case study, “Implement a Customer Health Score to Identify Risks & Renewal Potential).
After identifying these key CHS metrics, Vecna Robotics could tackle each to improve the overall score.
In as quickly as one month, the company had a clearer picture of its customers’ satisfaction. Today, Vecna can adjust its strategies for improvement and measure results to provide better automation solutions and nurture more fruitful customer relationships.
Doctor’s orders: Proactive strategies for CHS improvement
If you want to improve your customer health score as soon as possible, implement the following three steps:
Improve engagement
When you improve engagement, you increase customer loyalty and satisfaction. Whether you start a brand community or provide events and gamification features, find ways to deeply embed customers into the action.
One way you can improve engagement is by focusing on the next step. You can create an engaging and better onboarding and adoption experience.
Create a better onboarding and adoption strategy
You can increase adoption and satisfaction by adopting platforms that create seamless and fun product experiences. We’re not talking about annoying pop-ups that get in the way. It looks like AI assistants, checklists, and journeys that put customers in the driver's seat as they learn to fully utilize your app. The faster the customer realizes your app’s value, the better your health score will be.
Implement a powerful in-app feedback loop
Finally, add a way for customers to give feedback directly in the app. Make it easy and obstacle-free for maximum input. Feedback helps you get on top of the situation and catch needs and issues before they become problematic (an apple a day keeps the doctor away, after all).
Evolving with customer needs: The future of health scoring
Let’s be honest—things change fast. It’s like telling yourself that one more holiday cookie wouldn’t hurt. And then you get on the scale on January 1. How did your weight change that much overnight?
So what do you do?
Invest in platforms that can execute powerful customer journeys today and gather insights to build them for tomorrow.
Imagine utilizing AI assistants, satisfying onboarding journeys, and seamless adoptions. Customers see your product’s value in a few seconds, and you win them over.
Tools like Command AI create a proven, successful onboarding and adoption experience for customers. As your customers increasingly use your product daily, you can learn from them with robust tools and improve along the way.
Jumpstart your customer health score faster than a defibrillator with a powerful user adoption platform that puts your strategy into action, collects the data to improve, and positions you for continued growth.
