Back to All Topics
How Important is Customer Health Scoring for SaaS Business?
A customer health score is an organization's metric to determine whether customers are healthy or at risk of churn. Based on the score of the individual customer, retention strategies are implemented.
Introduction
Customers are the backbone of every successful SaaS business, regardless of what they do or sell. And while it’s effortless to get a handful of happy customers who will be vocal supporters of your brand, the real challenge is to keep them loyal over time and add new ones.
Here’s why a customer health score for SaaS business is essential.
A customer health score is a metric used by organizations to determine whether customers are healthy or at risk of churn. Based on the score of the individual customer, retention strategies are implemented.
A few years back, giving a big spin to the digital transformation bandwagon was sufficient to attract plenty of investors. Today, it’s deemed just as crucial for businesses to ensure their bottom lines remain healthy to ensure growth and success in the long term.
What is Customer Health Scoring for SaaS? Why is it Important Now More than Ever Before?
Customer health scoring determines whether a customer is healthy or at risk of churn. Based on the score of individual customers, retention strategies are implemented. Let’s uncover the aspects of SaaS scoring for businesses and how it helps minimize customer churn rates.
In most cases, a customer health score is calculated by evaluating the following:
- Customer Behavior: How often have they used your product in the past 30 days? Are they using it more than others? If not, what stops them from using it more frequently?
- Customer Engagement: Do they engage with you on social media? Do they share their experience using your product with others? Are they happy with the service you provide?
- Customer Loyalty: How much do they spend on your product in total? Do they share value for money with others when talking about your product?
Customer health scoring is essential for SaaS businesses because it allows them to keep close tabs on the health of their customers.
This is so important because there's neck-to-neck competition in every industry, and customers have endless options to choose from.
If you're not paying attention to your customer's health, you could take advantage of the chance to win over a new customer or retain an existing one.
How to Measure Customer Health Score for Your SaaS Business?
It’s always a great decision to take timely action to increase your customer retention rates. Here’s the list of aspects to consider for measuring customer health scores for your SaaS business:
#1. Analyzing and Working on Customer Churn Rate
The churn rate is the percentage of users who cancel their subscription or stop using your product within a given period. This is a way to measure how many people are leaving your product and how many are staying.
A high churn rate means more people are leaving than sticking with your product, which could mean they're unhappy with it. A low churn rate means that people are sticking around and not canceling their subscriptions as often, which is a good sign!
Here’s what you need to do to improve your churn rate:
- Reach customers for feedback
- Offer discounts and incentives
- Improvise based on user feedback
- Improve customer support
#2. Customer Engagement- The Key to Enhance Customer Health Score
Customer engagement is the degree to which a customer interacts with your product/service. To ensure a high customer health score, you must have a high level of customer engagement.
This means that your customers are using your product/service, logging into your product/service, and reaching out to customer support when they need help.
You can easily track these aspects by following how often users log in, use the product/service, or reach out to customer support. These three things will tell you a lot about how engaged your customers are with your brand.
#3. Keeping Track of Support Tickets
Support tickets are an essential part of your customer health score. They can be the deciding factor in whether or not you get a good score.
When it comes to supporting tickets, we look at the number of tickets opened for the length of time between the opening of one key and another (e.g., if a customer has been opening new tickets every day for over a week, there probably needs to be something wrong).
What type of ticket is opened (e.g., if we see that someone is opening a lot of general questions and a few specific ones, it's likely they're frustrated with our product)?
Keeping track of these kinds of tickets could quickly help you improve your product/services to a great extent, contributing to enhanced customer health scores.
To Conclude
Customer health Scoring aims to efficiently and accurately analyze your customers' health. It's a great way to keep track of everyone.
However, you can't simply add it as another feature and hope it'll work out magically like that. Every SaaS company requires customized solutions for their unique challenges, and hence, there's no one-size-fits-all approach for business owners.
You must understand that customer health scoring is a long-term investment with high returns.
