How to Create a Real-Time Customer Health Score

Looking for a single metric that'll tell you whether your customers plan to stick around or leave you?

The customer health score is your triumph card.

Using qualitative and quantitative data, it analyzes your user's behavior, finds patterns, and helps your customer success team zero in on the at-risk accounts and nurture the right product-qualified leads (PQLs) toward cross and upsells.

In short, it creates a chain reaction of customer retention and can help your B2B SaaS start-up hit those major revenue milestones.

What is a customer health score?

Your customer health score is a metric that helps you predict if an account will churn, grow or stay consistent. It's vital information your customer success teams need to identify accounts for upselling opportunities and those showing at-risk behaviors.

So, it's just "overall customer happiness," right?

Wrong.

Your customer health score goes deeper than sentiment. You're looking for data to validate your gut feeling that an account finds measurable value in your product.

Without it, your renewal rate will drop, and your churn will increase.

How do you find the data you need? A real-time scoring system that looks at qualitative data (e.g., a NPS survey) and quantitative data (e.g., usage and product adoption data).

How to manually calculate your customer health score

Creating a customer health scoring system is similar to lead scoring.

You need:

Here comes the tricky part.

You can't treat all your predictive signals with equal importance. If you do, your health score calculations won't be accurate. You need to assign different values based on importance to make the metric meaningful.

For example, your customer health score might end up looking like this:

Once you have your outcome, predictive measures, and weighted signals, you can use a sliding scale of 0-100 to segment accounts into good, can improve, or unhealthy.

Then, your CS team can step in and implement a strategy to move your unhealthy customers into the healthy range.

Check out our example Customer Health Score calculator below:

That covers the quantitative, but what about the qualitative measure?

The final step in your manual customer health score formula is to speak to your customers. Markus Rentsch, CEO at Remark-able, recommends asking your users how they measure the ROI of your product.

Your leading indicator if an account will renew is based on the customer’s outcome.

Create your first no-code, real-time customer health score

Are you manually trawling through your tools, compiling a Sheet or Notion page that needs weekly updating? We grew rather fatigued with that whole process. Customer health scores should be easily built and updated in real time according to your customers’ behavior.

Let me walk you through how we do scoring at Breyta.

1. Set up your integrations

You can use Breyta to consolidate data from HubSpot, Intercom, and Segment - wherever you have event data.

Then, you can combine this data to create Scores and Signals and pass the data back to HubSpot if desired.

2. Head to the Scores section and select “Create new score”

3. Set up your Health Score

Your Health Score is largely influenced by your Engagement Score, which is what you want fetched.

4. Gauging health based on engagement

Let's quickly break your Engagement Score down.

Don't stop there; broadening your analytical horizon with additional conditions will sharpen your insights, bringing the intricate profiles of your users into crystal-clear focus.

This is not just data analysis; it's the art of understanding your customers' journey, sculpted with precision and insight.

The most important customer health score metrics

What should you track if NPS doesn't give you an accurate health calculation?

Here are some of the most important metrics to create a proactive customer success culture and fuel your customer health score model with real-time data.

Product setup

No matter what type of SaaS business you’re running, product setup is  crucial to your success.

If users never start, fall off halfway or abandon their account, churn is right around the corner.

And the worst part?

There’s not much you can do to stop it because you haven’t established your value in the user’s mind.

Tracking your customer’s progress through the product setup process is the best way to make sure you’re laying down the foundations for a sticky customer experience. If someone is not progressing, that’s a signal for your CS team to step in and help smooth out any bumps on their road map.

At Breyta, a key step in our product setup process is asking users to turn on our CRM integration. Without the flow of data between the two tools, we can’t deliver on the value of our product - unifying customer data and putting an end to data silos.

Product usage rate

As a PLG company, your product usage rate is an essential metric.

If no one is using your product, you're not getting paid.

To prevent the worst-case scenario from playing out, your customer success team must keep a close eye on meaningful product engagement.

Beyond an increase or decrease in usage, you should consider the following:

These questions help you create a comprehensive product usage rate. One that'll clearly indicate how valuable your tool is to an account and if they're likely to continue paying for it or hit "unsubscribe."

At Breyta, we take care of the heavy lifting by aggregating user behavior to a company level.

What does that mean?

You’ll get an average score of engagement for all users from a company. It includes product usage, NPS score, activity levels for each user etc.

Number of support tickets

No one likes reaching out to customer support.

It's time-consuming, frustrating, and, more often than not, a painful experience.

You're either waiting for an email reply (which can take up to a day with time zones), or you're sitting on hold listening to the worst panpipes version of Celine Dion's "My Heart Will Go On" for what seems like an agonizing eternity.

So if a customer keeps raising tickets, that's a giant red ol’ churn flag.

To turn the tides back in your favor, encourage your CS team to drill down to the core problem. Is the same issue coming up again?

If so, why?

How can you remove the friction they're experiencing and ensure it doesn't happen again?

By keeping your finger on the CSM pulse.

CSM pulse

The CSM pulse is a subjective grade your Customer Success Managers (CSMs) give each account they manage. Think of it as a human "gut check" on the happiness of your customers.

While it's not as quantitative as other customer health score metrics, it's still important. Your CS team deals with your customers daily and have an understanding of the overall sentiment better than anyone else.

If a customer success representative thinks an account is at renewal risk, heed their warning. Combine that gut feeling with cold hard data, and you're in a strong position to eliminate any blind spots holding back your growth.

More customer health metrics to measure

Why you can't rely on Net Promoter Score (NPS)

On paper, NPS looks great.

Send out a survey, analyze the results, and bam! You have a list showing how happy or unhappy customers are with your product.

So, what's the problem? Isn't it the "single customer metric you need"?

Nope.

Relying solely on NPS is akin to wearing blinkers.

You're blinding yourself to vital churn signals and limiting your CS team to only one piece of data as your source of truth.

Research shows the effectiveness of NPS doesn't hold up on further examination.

While you shouldn't stop using NPS, you need to use it with your other customer health score metrics to see the full picture, not a brushstroke.

How to improve your customer health score

More customers in the orange or red zones than you'd like? All hope is not lost.

Here are three steps to improve your score and create a loyal customer base who love your product.

Step 1: Encourage CS to speak to customers

Beyond scheduling regular check-ins and following up on survey responses, the best way to figure out what's bothering your customers is to show up and ask.

These conversations are never easy, but they allow you to turn around a relationship and gain valuable product feedback.

Remember, only 1 in 26 customers will make a complaint when unhappy. The rest will churn without saying a word.

Step 2: Replicate what you do well

Once you implement a customer health score, you'll start to see patterns in your data.

That's where things start to get exciting.

Using these data points, you can stop the guesswork. You'll have data to back up your decisions to reduce time-to-value (TTV) and the exact ingredients that make up your happiest, long-term customer relationships.

Step 3: Review your ICP

Are you attracting the right customers? If not, your frictionless experience and incredible customer support won't matter.

It's still the wrong tool for the wrong people.

As leads filter into your CRM, your sales and customer success leaders need a way to see the customer fit score.

The metric ranks each account against your ICP criteria, helping your team nurture the right PQLs.

If you notice a median of low-fit customers, that's a sign something is wrong with the "attract" section of your customer flywheel.

Why is the customer health score important for PLG companies?

Imagine you're playing a game of cricket.

Your opponents have brand-new bats, leg guards, gloves, and the latest Adidas full-spike cricket shoes.

Your team, on the other hand? You have wonky hand-me-downs and have to play the game with one hand behind your back.

That doesn't seem like a fair match. It's almost like you're being set up to fail.

Well, that's what happens when your SDRs hand over a new account to CS and important customer health scorecard data is lost. It handicaps your customer success representative, creates a lack of focus, increases workloads, and frustrates everyone (including the customer).

When you implement a scoring system and combine it with data enrichment, it helps sales, customer success, and your bottom line in the following ways:

Benefit #1: Identify power users for land and expand opportunities

An annual run rate of $10,000 is your first challenge as a SaaS start-up. It doesn't seem like much, but once you hit that first milestone, it makes reaching subsequent $10,000 milestones much faster.

How do you get there? A solid land and expand strategy.

Without one, your CS team might focus on nurturing the wrong accounts, and you'll miss out on expanding your first Enterprise account.

Your customer health score helps you quickly surface the best opportunities and identify power users, your product champions.

These users are vital to singing your praises to the CEO and helping you gain more seats in their business.

That's not all.

These users create powerful social proof, brand awareness, trust, and credibility.

Benefit #2: Nurture freemium users at the right time

What's the #1 product-led growth challenge? Converting free users into paying customers.

It can often feel like you're a salmon swimming upstream. You have an incredible freemium product that's driving tons of sign-ups. Your product usage rate is going strong.

Yet, you’re still fighting with the current and your ARR isn't growing.

So, what's the problem? Well, there are two things you need to ask yourself:

If it's the latter, you can use your customer health score to turn those lurkers into paying customers. The metric helps your CS team step in at the right time to nurture an account without coming across as overbearing (starting the process too soon) or stepping in too late (ignoring churn red flags and upselling white flags).

How does that work in practice?

Using a customer health score tool like Breyta, you can set up event decay and assign value to more recent events.

For example, a user invites x amount of people from their company or configures something in the product that signals to your CS team it’s time to step in.

Benefit #3: Stop churn with preventive actions

User engagement dropping? Fewer logins than normal? Sound the alarm!

Your customer success team has a potential churn case on its hands.

…But how do you surface these accounts with poor health symptoms before someone hits the "cancel subscription" button?

Your customer health score. It helps you solve issues faster and successfully manage customer expectations reducing your churn by 67%.

Using your data like product usage or subscription status, you can set up behavior alerts for accounts and nip cancellations in the bud before you become one of the businesses losing $136 million to avoidable churn every year.

Your customer health score in action

You have your data. Now what?

Signal lists, aka intent data, are how you can use your customer health score to surface accounts that require your attention immediately.

Not sure what to look out for? Here are some signs you can use to build your lists:

That said, don't get lost in your data.

While we rely on customer health scores, NPS, and user activity to measure success, these metrics aren’t a clear reflection of your customer’s reality. Your product needs to solve a pain point and lead to a transformation like increasing revenue or decreasing costs.

If you're meeting these expectations, you automatically set yourself up for healthy customers who will stick by your side.