The key metrics that feed CHS
The metrics that your company uses to measure CHS depend largely on the type of business you run. As a point of reference, the list of CHS metrics at CustomerThink includes renewals, upsells, survey results, customer engagement, total money spent, time spent as a customer, and overall usage of your product or service, among several other metrics. Some of these may not apply to your company, and there may be other important measures of your customers’ health not listed here at all.
Mapping metrics to business drivers
When in doubt, a good rule of thumb is to map your CHS metrics to the key customer-related drivers of your business. For example, suppose you’re a Software as a Service (SaaS) startup that is more concerned with building a highly engaged initial subscriber base than with upselling customers to the highest-yield plans. In that case, customer-engagement indicators that reflect signs that your customers will (or will not) continue to renew their current subscriptions may serve as the key metrics in your overall customer health score.
However, as your company evolves, so will your customer health metrics. Therefore, it’s important to revisit your CHS periodically, especially if it’s automatically generated.
Number of metrics
According to the team at Wootric, a reasonable number of metrics to use is four to six (although having more or fewer is by no means a red flag). You will probably find that the more complex your revenue streams are, the more metrics you will need.
Objective vs. subjective metrics
Another important factor that Wootric points out is the inclusion of subjective metrics. Customer success experts recommend that you should generally try to restrict the number of subjective metrics to one or two.
You will need to add a weighting to each CHS metric according to its importance in the overall customer health score. For example, suppose that after a year of running your SaaS business, you find that service subscription/membership upgrades are twice as important as referrals in generating business. Accordingly, you might give the upgrade metric a weighting of 10 and the referral metric a weighting of 5.
Net Promoter Score
Another popular approach is the Net Promoter Score (NPS). Companies using NPS periodically give their customers a single-question survey, asking them to rate how inclined they are (on a scale of one to ten) to recommend the company’s service to others. Customers that choose 9 or 10 are promoters, 7 or 8 are passives, and 1 through 6 are detractors. The NPS equals the percentage of promoters minus the percentage of detractors, and could serve as a key metric in your overall CHS strategy.