Setting up a Customer Health Score is often considered complex. It can actually be quick and easy with the latest technology and modern AI.
Customer health score is an indicator of the customer's health and future loyalty. The lower the score, the greater the risk of churn; the higher the score, the healthier the account, the more likely it is to renew its contract and to take out new options (upsell). It is therefore a major indicator in Customer Success.
The implementation of this indicator is often considered complex. This is because some companies have built very sophisticated health scores, based on several dozen metrics and as many data streams.
But it doesn't have to be that way! With the new generation of tools, it is possible to set up a health score very easily, with an unequaled level of performance.
We don't believe in the traditional Health Score approach
First generation Health Scores generally work with a business rule principle. The CSMs define rules like "if I have at least N users who use feature X in the Y days following onboarding AND [new condition], THEN ...". The approach is therefore not algorithmic, but deterministic: the business decides what is indicative of the health of an account, and what is not.
We believe that this approach is totally unsuitable for start-ups that do not have enough time or hindsight.
First, this approach is uncertain because a young company with few customers - and few churn - simply does not have the hindsight to correctly identify the predictive signals of churn;
Then, the creation and implementation of these rules is very time-consuming for the CS teams. And several iterations are necessary: each time the score fails, it is modified to take into account the new situation;
Finally, they are too rigid and therefore react badly to seasonal effects. Are you a retailer? All your customers will suddenly become good customers in the run-up to the sales and will fall away afterwards!
Skalin reinvents customer health score
At Skalin, we decided to break the code to provide a modern, powerful and easy to roll-out health score.
"Simplicity is the ultimate sophistication" - Steve Jobs
No more business rules, opt for an algorithmic approach!
The basic premise: Skalin constantly compares all your customers on dozens of indicators to determine the strengths and weaknesses of each of your accounts. By systematically comparing your customers, it becomes easy to determine who is above or below average. Seasonality effects are neutralized.
Synchronize 4 data sources, effortlessly
Our algorithms are natively based on 4 families of criteria:
Product usage: proportion of active users, time spent on the platform, depth of use, level of adoption of your key features, time between two connections, evolutions...
Customer conversations : proportion of contacts addressed, decision-makers regularly involved in the process, level of customer satisfaction with each interaction (sentiment analysis), response rate to emails, etc.
CSM Pulse, i.e. the assessment that CSM makes of the account
Contract related Data: evolution of the MRR, consumption of additional services, contract history, remaining duration, etc.
These criteria offer a good mix of quantitative and qualitative inputs, and give you a global view of your customers across all your touchpoints. There are other possibilities to enrich our models, but these criteria provide maximum robustness and performance in most cases.
💡 The good news is that these events are extremely easy to collect thanks to integrations with your existing tools and a simple tag within your application.
Customize your algorithm to be as close as possible to your business challenges
You can then define the weight you wish to give to each type of criteria. It is also possible to isolate specific customer segments so that they have their own health score and weightings (see capture).