How to Measure Customer Health Score and Why It Matters

Illustration by Macrovector via Dribbble

The customer health score is a phenomenon that not many people understand but is essential regardless. It is such a commonly used term in marketing that it is now included in most marketing conversations. As a business, your customer health score has to be high to drive the continual progress of your business.

Otherwise, your business may not remain sustainable for very long. Many people will begin to doubt the safety measures you put in place regarding your product and get discouraged from buying it. It may interest you to know that only about 10% of startups and businesses remain relevant and operational within five years of use.

That’s a shocking statistic, and one of the influences behind it is the low customer health score of many businesses. If you want to know what a customer health score is and why it matters, you’re in luck. This article will help to explain how the customer health score works and why you need to pay more attention to it.

What is a customer health score?

As mentioned earlier, customer health score is a concept that’s not understood by a large number of businesses. Fortunately, this concept is straightforward to understand.

Simply put, it is the measure of a customer’s relationship with your brand, measuring the likelihood of a customer sticking to your brand no matter the circumstances. In other words, it measures How loyal your customers are to your brand.

For example, imagine this: you own a beverage-producing company that has been around for a couple of years. Naturally, you would have some competition whose products may or may not offer a different taste.

They just recently came out and started offering lower prices for more amounts, and so some of your customers “switched sides,” while some others ignored this and continued to buy your product. This is an excellent example of a customer health score, as it helps to understand how much your product or service brings to the table.

So, the goal of any business is to have a good customer health score, which would help keep their businesses’ income reasonably steady and even increasing.

How it works

Now that you know how the customer health score works, you should understand how it works and how it is calculated.

Basically, the method to calculate the customer health score differs based on industry and type of business, but the ideas and principles remain the same. Below are some examples of factors included in a customer health score calculation:

 icon-angle-right Product Usage

This means the number of people that are using your product at a particular time. There are different ways you can estimate that, but it is commonly done by looking at sale records.

 icon-angle-right Customer Feedback

Customer feedback is crucial for businesses that deal with rendering services, as this is one of the only ways they can rate the quality of their business.

 icon-angle-right Marketing Engagement

Marketing engagement simply means the number of people that agree with your ideology, but your products, and how much engagement it’s getting in the public market.

 icon-angle-right Website Activity

This is one of the most common ways you can estimate customer health scores, and it involves the number of people that visit your website. You can easily do this by checking the records of website visitations and checking other factors like overall visibility.

 icon-angle-right Customer Support Cases

Customer support cases are the number of people that have called back issuing complaints. Typically, if you don’t get a lot of complaints about your product, then it most likely means that your product or service is going well.

 icon-angle-right Product Upgrades and Renewals

Another factor you can include in your customer health score is the number of product upgrades and renewals your company has issued out, which shows how much your company tries to improve its craft.

 icon-angle-right Community Participation

Lastly, community participation is equally an essential factor you can include in your business. This simply means the number of communities back your product and how many people in that company use your product or service over your competition.

No matter the industry and calculations, there are several things you should do when trying to determine the customer health score. They are:

#1. Understand what the customer health score of your business would mean

Before you start anything, you first have to understand what customer health for your brand will signify and why you need it.

For some, they use it to alert themselves of churn, while some others use it to gauge how strong their customer’s loyalty program is. Whatever your reason is, understand what your business’ customer health score would mean before you start calculating. Otherwise, you may be wasting your time.

#2. Decide what methodology is most suitable

As mentioned earlier, there are several ways to determine the customer health score of a business, and the methodology largely depends on the type of business you run. Some examples of the factors you can include in your calculation are in the previous section.

#3. Come up with a scoring system

Every industry and company are slightly different in one way or another, so it may not be the wisest move to use a scoring system created by another company. When you want to calculate the scoring system, make sure you understand the criteria you want to set for your customers and make sure it’s realistic.

#4. Analyze your customer data

The last thing to do after calculating the score is to try and analyze the result. Doing this would help you understand what you’re doing right in handling your business and what needs to be improved upon. For example, if you need to understand how to improve your website’s SEO, this analysis would show that to you.

Why it matters

A customer health score is a handy tool in the marketing world, and the above sections have helped explain how it works and what it is in the first place. Now that you understand those, the next thing you should understand is why it matters in the first place.

 icon-angle-right It helps you understand what works

Understanding what works is crucial to any business. Without this, you wouldn’t be able to see what’s wrong with your business and what you need to change. Sometimes, you may think an ideology of yours is crucial to your body’s development when it may be a reason your business isn’t doing as well as it should.

Hence, understanding what works is essential, and an excellent way to gauge all the elements of your business is by using the customer health score.

 icon-angle-right It helps you understand what doesn’t

Just because most of your competitors are using similar approaches to their businesses doesn’t mean it’s right. This is a mistake many people setting out In business make. They look at their competition and the methodologies they use and apply them to theirs.

However, statistics show that this doesn’t help their business more often than not. Because businesses are different, what works for one business may not work for the other. Hence, a customer health score helps you understand what’s not working for your business and what you need to change.

 icon-angle-right Drives your businesses’ development

Your businesses’ development should be of utmost importance, and a customer health score is an excellent way to measure and predict the direction of your company.

A negative value on a customer’s profile means that they’re not happy with your service and need to be persuaded to rely on you more. Ideally, what sets apart a good customer health score from a bad one is the difference between positive and negative ones.

A predominantly positive result in the health score shows that many of your customers trust you and remain loyal to your brand. On the other hand, a predominantly negative one would mean that these customers are occasional patronizers and don’t see your brand as reliable.

 icon-angle-right It tells you how to keep up with your competitors

If you look out now, you would quickly realize that the times are changing fast. What worked for a business as near as 2015 may seem outdated in our present age. If you want to advance with the times and keep your business from becoming obsolete, then using a customer health score on your business is one of the first steps to take.

Final thoughts

A customer health score is a metric that can make it mar your business. It is so essential in the development of your business, which is why you should keep track of it often. There are several ways you can do that and calculate the customer health score, and this article has helped to explain that in detail.

By doing so, you would fast-track your businesses’ progress, making sure you’re never part of the 90% of businesses that don’t make it past the first five years.

As a side note, make sure you take care of your mental health when your business is involved because negligence can damage your mental health, haltering your progress.

About the Author!

Kathrin Garner is an enthusiastic journalist and writes articles on social issues. As an activist, she takes part in Moods Magazine program, which is a discussion platform on the relevant detoxification topics. So, if you want to know the best how to detox your body and an expert review of THC detox products, feel free to contact her. She searches for current issues, and writes about them to a wide range of readers.

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