How Do You Know If Your Customer Is Healthy?in Voice of Customer, Key Account Management /
Customer retention is a hot topic in B2B business, because of the large scale of many customers and the impact of each customer leaving. With rising competition in many industries, it’s time to talk seriously about customer health.
Defining Customer Health
Most companies define customer health by using a scoring system. The score is based off of industry-specific KPIs that show the future potential of the customer. An unhealthy customer is one that has a higher potential of churning, decreasing their account, or dropping off. Healthy customers are those with potential to grow their accounts and stick with your company in the long-term.
Most companies will have different metrics to define a healthy versus an unhealthy customer, depending on what industry they are in and their specific strategies and goals. For B2B companies, customer health is generally more important, as there tend to be fewer customers, with each one holding a larger account. Account managers should focus on improving customer health in order to create stronger strategic partnerships and grow customer accounts.
How Most Businesses Measure Customer Health
In many businesses, customer health is measured by looking at progress markers and metrics from within the customer’s company. To see an unhealthy customer, you would look for revenue drops or disengagement from customers. Healthy customers would show the opposite, with increases in account revenues and more engagement or otherwise.
This method is somewhat effective, but it does have drawbacks. The biggest problem is that you’re looking for signs in the rear-view mirror, meaning that by the time you spot an unhealthy customer they will already have developed issues. You may not be able to correct every issue once it has already developed, making it difficult to turn an unhealthy customer into a healthy one.
Customer health is usually seen as a reactive indicator that should be used to change the future actions you take with your customers. But, if you try more proactive methods of measuring customer health, you may find that you’ll stay ahead of customer churn and retain more customers over time.
How to Be Better at Managing Customer Health
No customer relationship is perfect, but that doesn’t mean that every way of monitoring customer health is the same. Some methods work more effectively and provide you with more workable information to help solve problems. Here are some tips for getting better at managing your customers:
Proactive Account Management Strategies
Don’t be caught off guard when it comes to customer health. Being proactive will always give you more time to fix problems before they get unmanageable and result in customer churn or decreasing revenues. Strategies like Continuous Relationship Management (CRM) help you stay on top of what’s happening with each client by keeping in touch frequently and being actively involved in the partnership.
Implementing a CRM strategy helps you to systematically stay in touch with your customer’s needs, instead of only looking into their issues when they are visible. What you want is to uncover problems while they are still small or when they are first developing. If you think of account management in a strategic way, rather than a response to customer complaints, you will find more success in retaining high-quality customers and growing accounts.
Account management should not operate like a fire fighter, but a fire safety inspector. Whereas fire fighters are there to respond when things go up in flames, the safety inspectors look for signs of danger and work to prevent fires before they occur. The safety inspectors actually have the more important jobs, as they are dedicated to telling when a problem is likely and making sure the mechanisms are in place to alert the fire fighting team is a problem does occur.
Instead of waiting until you can see an issue before addressing it, become a diligent inspector who seeks our signs of problems long before they are visible. Be relentless in pursuing the truth about the health of each customer. This is the best way to make sure you’re playing your part well and keeping your customers invested in the partnership.
Voice of Customer (VOC)
Updating your VOC should be a regular part of your customer management agenda. How can you really understand how your customer is feeling about your relationship unless you know who your customer is? If they are making any changes or evolving towards a different strategy in their business, the best way to know and to keep up with them is to perform VOC surveys often.
VOC surveys shouldn’t be boring questionnaires emailed to your customer contacts. Instead, you should do face-to-face interviews to get a better feel of those who you’re communicating with. You will need to talk with them about the goals of the company, progress towards milestones, any concerns they may have, how your company is doing as a provider, etc. The survey should focus on your customer, and the results should be sent out around your company afterwards.
Customers need to see you taking action to account for any changes in the VOC. If they have changing needs, they will want to see you evolving to meet those needs. The VOC is going to help you discover the health of each customer relationship, because you will be going in-depth to seek out answers about the partnership and how it meets the needs of the customer.
Ask the Customer
No one knows how the customer is feeling about your company better than the customer themselves. One of the simplest ways to judge the health of a customer relationship is to ask the customers themselves. You’ll want to make sure you set up the environment for honesty and bring the right people to the meeting.
Alert your customer contacts ahead of time that you want to have a meeting to talk about your partnership with them. Let them know some of the questions you want to ask, so they can prepare for it ahead of time and give you the best answers possible. Make the meeting small, with only the absolutely necessary people involved, to encourage openness on both sides. Your customer contacts may not feel comfortable telling their vendor’s CEO that they are unhappy, but they might tell you.
Honesty is absolutely critical in this situation. You need to do whatever you can to encourage your customers to speak honestly about how they see the health of the relationship. This means it’s not time for you to prepare a large speech or have your list of talking points ready. Instead, you need to get ready to listen and delve deeper into their concerns. You need to ask follow-up questions to see if you can trace each concern down to the very root. From there, you’ll be able to tell if you have a healthy or unhealthy customer on your hands, and if it’s possible to correct any problems listed.
Look for the Right Warning Signs
Certain metrics can help you spot trouble in the relationship beforehand. It’s not good to rely on these metrics alone, but when combined with the other strategies above, it can be a useful way to see something coming ahead of time. You will want to look for warning signs and metrics that are useful for predicting a problem, not for showing problems that have already caused too much damage to the relationship.
Customer Communication to You
Pay attention to the signs of an advisory relationship and how that is playing out with your customer. If you are hearing about strategic decisions they make or new initiatives after they are already implementing them, or after others who work with the customer, that is often a sign of a weakening customer relationship.
A healthy customer relationship, especially one where you are playing the role of a strategic advisor, sees you on the forefront of customer decision-making in areas relevant to your industry. If you are not part of the decision-making process, you should at least be informed about the changes before the general public. The later you are receiving information, the weaker the relationship is.
Revenues and Projections
If customer revenues are showing signs of shrinking, it may already be too late to fix the damage. But, catching on quickly can help you reverse the damage before it gets any worse. Projections can also be a helpful tool, as they can be a signal of a bad relationship if the revenue projections are showing signs of stagnation or decreasing without any external influences on the customer account.
Gauging Customer Answers
If customers are always giving generic answers when you ask them about how it’s going with your product or service, you may be wise to consider it a warning signal for trouble ahead. This could be a sign that they are not happy with something, but they are simply not informing you about the problem.
If it is the account manager who reports this information back to you, you may want to go personally and talk with the customer yourself. If you are the one getting these generic answers all the time, recruit someone else to go in your place to try to get to the heart of the matter. It’s unlikely that the customer is perfectly happy with you all the time and never has any concerns to bring up. So, if they always answer that they are happy with you, that can be taken as a sign that things may not be as smooth as they say, and you should investigate further.
Balance of Resources
Healthy customers have a set amount of resources needed to maintain the account well. There is a good plan in place that’s followed, and it benefits both parties involved. If the balance of resources begins to tilt in either direction, causing too much strain on you or requiring too much from the customer, that is a sign of an unhealthy customer. Check how well your relationship is following the plan you set in the beginning. If it’s too off-balance, check up on your customer thoroughly.
Creating a Road Map for a Successful Relationship
The theme of all the strategies for improving on customer health management is to be proactive and prepare early. You should have a road map to success with your customers, and it should be updated every time you get new information about where you customers want to go.
Mapping out your plan for the customer is very effective, because it gives them an understanding of how you want to proceed and what you are committing to do. With this knowledge, they can be better prepared to fit into their own self-committed goals and work alongside you to make the best use of your products or services.
Making a road map to success shows your customers that you’re invested in the partnership. It gives them a clear path on how they can use your products or services to get to their goals, while also allowing them to see how you will aid them in reaching those goals. This is a fantastic model for maintaining a healthy customer, as it makes it clear what each party should be doing and helps you see if someone is deviating or not fully committed to the plan.
Proactive customer management is a better solution for checking up on customer health. Being proactive in this area will keep your customers from churning and will increase your chances of a healthy, long-term relationship with each customer. Instead of responding to customers once they start becoming unhealthy, work ahead of time to keep customer growth stable and avoid revenue stagnation.
Lesley is a Key Account Management Specialist at Kapta.