Customer Health Score

Quick Definition

A composite metric combining usage, engagement, and sentiment signals to predict customer renewal likelihood.

What is Customer Health Score?

Customer health score is a composite metric predicting the likelihood a customer will renew or churn. It combines multiple signals (usage, engagement, support interactions, sentiment) into a single score that helps prioritize customer success efforts.

Healthy customers are likely to renew and expand. Unhealthy customers need intervention.

Why Health Scores Matter

You can't manually monitor every customer for churn signals. Health scores automate early warning detection, letting customer success teams focus on accounts that need attention before they churn.

Good health scores predict churn 60-90 days in advance, giving time for intervention.

Building Health Scores

Identify metrics that correlate with churn: login frequency, feature usage, support tickets, NPS, payment issues. Weight each component based on predictive power. Validate against historical churn data. Continuously refine as you learn more.

Formula
Health Score = Σ (Component Score × Weight)

Components typically include: usage, engagement, support, NPS, payment

Calibrate weights based on correlation with churn

Example
Your SaaS company calculates health scores (weighted):

• Product usage (40%): 85/100
• Support tickets (20%): 70/100 (fewer = better)
• NPS response (20%): 90/100
• Payment history (20%): 100/100

Health Score = (85×0.4) + (70×0.2) + (90×0.2) + (100×0.2) = 86

Score above 80 = healthy. Below 60 = at risk.

Related Terms

NPS (Net Promoter Score)
A customer loyalty metric measuring willingness to recommend, calculated as the percentage of promoters minus detractors. Learn more

Churn Rate
The percentage of customers or revenue lost over a specific period, measuring how quickly you're losing business. Learn more

Customer Retention Rate
The percentage of customers who continue doing business with you over a specific period, measuring loyalty and satisfaction. Learn more

See These Metrics in Action

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