The Customer Health Score (CHS) is a key metric for your customer success program. It allows you to assess the health of your company’s relationship with the customer.
Are you interested in learning more about CHS? Read this article and find out more about this KPI and how it impacts the daily routine of your company.
What is a Customer Health Score?
The Customer Health Score is an indicator that helps the team understand the depth and quality of the relationship with your customers.
It measures the levels of customer satisfaction and engagement with the products or services they have purchased from your company. In other words, it should be closely monitored by service teams (especially after-sales and support staff).
Besides measuring customer health, it provides data on potential churn (loss of customers for any reason) and opportunities of upselling (additional sales). So, in summary, the Customer Health Score measures the likelihood of a consumer to continue buying the product or service.
What does customer health mean?
Basically, customer health indicates the level of consumer engagement with a product or service. It measures brand loyalty, customer retention, and customer satisfaction. Therefore, measuring customer health and keeping it high can ensure that customers will buy from your company again.
In other words, using the Customer Health Score helps you improve your services and increase your company’s revenue.
Read more: How to improve empathy in customer service
Why is it important to monitor the Customer Health Score?
You’ve seen that the Customer Health Score contributes to customer loyalty. But far beyond that, this index will help you measure:
- the value of your services and products to your customers;
- customer interest in doing business with your company again;
- the likelihood of customers to recommend your products and services to other people.
In other words, the CHS shows whether the customer health status is good. Good health status means that your customer is satisfied with your company and the products or services they’ve bought. As a result, your customer is more likely to buy again and naturally become a brand advocate.
For example, a study by Bain & Company shows that loyal customers spend up to 67% more than new customers. And a study by the Nielsen Norman Group found that 83% of loyal consumers often recommend the companies they like to friends and family members.
Understanding the importance of the Customer Health Score will help your company identify bottlenecks more easily. Then, you can optimize various aspects of the relationship between the company and its customers.
However, you should realize that, when a Customer Health Score is low, it’s important to pay attention to all business processes. See below the benefits of monitoring the CHS.
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Reduced churn rate
The Customer Health Score allows you to see consumers who are unhappy or at risk of churn. By monitoring the score, you can act proactively and prevent customers from migrating to the competition.
Then, based on the CHS, after-sales and support teams can prioritize interactions with customers at risk. In these cases, you can offer additional support, customized solutions, and other incentives to keep them engaged.
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Improved customer loyalty
In general, healthy customers are more satisfied with the service or product. So monitoring the CHS helps keep them happy by ensuring consistency in responding quickly to their needs and concerns.
In addition, analyzing the Customer Health Score provides a better understanding of your customers. In other words, it’s possible to provide more personalized interactions and build long-term relationships based on trust and value.
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Increased revenue
A high CHS indicates that your customers are likely to buy additional products or services. Therefore, monitoring this indicator helps identify customers who are ready to receive offers, leading to increased revenue.
Also, keeping customers healthy and engaged over time maximizes the value of each customer. In other words, long-term customers tend to spend more and recommend your products and services to others.
How to act according to the customer health indicator?
Understanding the Customer Health Score and acting accordingly is critical to ensuring continuous satisfaction and engagement. In this context, it’s recommended to identify customers with low CHS.
Prioritize interaction with these consumers to understand and resolve their concerns. Also, offer specific solutions based on the needs identified and remember: continuous monitoring is extremely important, so review the CHS regularly to adjust strategies as necessary.
The Customer Health Score is not only used to identify problems, it also offers an opportunity to set your business apart from competitors. For this reason, consider holding meetings with specific customers and offering solutions tailored to their particular needs.
How to implement the Customer Health Score?
For your company to reap the full benefits of the Customer Health Score, it must be properly implemented. The most common method today is to categorize, weigh, measure, and implement. Find out how to apply it to routine tasks and get positive results:
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Categorize: understand your customer health
Define what customer health means to your company. In other words, list all actions that affect customer loyalty and differentiate which ones are satisfactory, troublesome, or essential.
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Weigh: define which ones will receive a score and a weight
The second step is to organize these interactions according to their importance. For example, which is more important to your company: not having any complaint ticket or requesting a new service?
In addition, every customer interaction should have a weight. It’s recommended to separate each interaction and think of strategies together with the leaders of each department of your company. This way, you can set up data-based plans according to the weight.
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Measure: how to calculate the Customer Health Score?
Calculate the Customer Health Score by adding up the score from the previous actions. An easy way to visualize the results is to use a color system such as red, yellow, and green for each stage. For example:
- Up to 50: potential churn / poor health status (red);
- 51 to 70: neutral / intermediate health status (yellow);
- 71 to 100: excellent / good health status (green).
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Implement: perform required actions
Take action based on the scores. In the case of poor health status (red), you should dedicate maximum attention to resolving the problem. In other words, contact your customer to find out what’s going on and how you can improve regarding your product or service.
For intermediate health status (yellow), it’s not as urgent, but it’s important to monitor the situation. When you contact your customer, take the opportunity to offer an even better service or something that will make the customer experience even more attractive.
With good health status (green), your customer is satisfied with your products or services. However, you can invest in actions to show how important the customer is to your company. The idea is to further improve the contact with these customers so that they remain happy and recommend your product/service to other people.
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See how Milvus tools can transform your customer experience and improve your Customer Health Score. With features such as advanced data analytics, efficient customer support, real-time monitoring, and automated feedback, you can quickly identify and resolve issues, ensuring happier and more engaged customers.
Increase customer loyalty and maximize the lifecycle value of your customers with Milvus. Try it now and see the difference in your team management and business results!
