The secret to a strong revenue pipeline isn't continual growth into new markets, with rapid lead acquisition, conversion, and sales. Instead, it's the long-term customers: the ones who trust your brand, will go out on a limb to try new products and services, refer you to their associates, and stay with you for renewal after renewal because of their faith in your relationship. Many businesses already know the stats: retained customers are cheaper and more profitable than new customers. But the statistics don't reflect this. According to a collection of statistics from SEMrush, "44% of businesses focus on customer acquisition, while only 18% focus on customer retention."
The knowledge is there. Businesses know customer retention is better. So why the mismatch?
We believe it's because the path to excellent customer retention is a bit more complex — it's not harder, but it requires a different set of stats and scores, as well as different processes, than what every sales and account management 101 course will focus on.
That's where a customer health score comes in; ultimately, when health scores are high, customers stay. So let's take a look at what this magic number is, when and how to measure it, and how it's really just good service and proactive attention behind the curtain — not magic.
What Is a Customer Health Score?
Customer health scores take qualitative factors — overall satisfaction, enjoyability, the feeling that the client's needs are being met, etc. — and quantify them into a quick, easy-to-read score that organizations can grapple with. At their most basic, these metrics serve as a pass/fail number that indicates whether a client's experience is progressing nicely or needs more active attention. On a deeper level, organizations can use these metrics to predict the likelihood of long-term retention, evaluate the metrics across different pools of customers to improve different experiences, and even assess the success of individual AMs.
Every company uses its bank of customer health scores differently, and every company gets those customer health scores differently. There are a wide variety of different assessment tools, ways of viewing and analyzing the data, and trigger points where scores result in different actions. This is where that complexity comes into play: your organization needs to choose the right fit for you. But once you have your processes in play and you methodically use the data, you can address customer pain points and keep delivering excellent service where your AMs score highly.
One of the key factors your choice of a scoring system will rely on is your set of in-progress KPIs. If your goal is to grow revenue, you may want a health score based on the client's intention to renew and buy more. If your KPIs focus on customer referrals, the health score should reflect the customer's likelihood of giving referrals and testimonials.
How to Determine a Customer Health Score
Before you can start collecting your health scores, determine your preferred type. While you can test with different mechanisms until you find the right one, it's best to start with one clear method. Three of the most common customer health scores are:
- Ask the AM: This is quick and informal, but it's imprecise. AMs will know the pain points and wins of the account, but they won't actually know the client's true feelings. Also, your AMs may be worried that a poor score is a negative reflection on them, rather than a chance for early intervention.
- Use indicators: Voice of customer surveys, a SWOT analysis, and frequent check-ins give you and your AMs a large dataset from which you can derive different aspects of customer health. These tools are more objective, so they garner stronger data.
- Collect leading and lagging indicators: These long-term metrics dive deep into the customer relationship and give you the best in-depth look at customer health. The only downside is they take a long time to collect and create an accurate baseline. These metrics work best to improve your overall systems over time, rather than necessarily intervene in a timely manner with an unhappy client.
Voice of Customer Survey
To get started, use a voice of customer survey. This allows your AMs to get feedback from clients regarding individual interactions, products, and more. Repeating this survey across the life of the client relationship allows you to build a pool of data and address low-performing areas. Even better, your client will feel like you care about their feedback.
KPI Metrics
Again, bring your KPI metrics into play. Determine what your objectives are for key account management and what metrics you'd like to see improve. Then you can build a customer health score paradigm that takes those KPIs into account.
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When and How to Review Customer Health Scores
Once you've chosen the method for getting customer health scores, it's time to choose often you'll review them, what you'll use those metrics for, and how you want to display them for easier business operations. Make a plan for reviewing scores so they don't sit stagnantly.
When
More often is always better than not often enough. By proactively monitoring customer health scores, your team can take action as soon as they dip or go below a certain threshold. By tuning in to small fluctuations, you can respond to emerging frustrations before they become problems that jeopardize the relationship. At each quarter mark or monthly mark, you and your AMs can sit down to evaluate opportunities for growth, pain points that need solutions, and more.
The right CRM can help here. Customer-centric platforms can be set to make customer health scores highly visible, automatically send reports, and set alerts for scores that need prompt attention.
How
Customer health scores are useful because they're quantitative. With just an alphanumeric character on a sliding scale, you, your AMs, and your leadership team can instantly see the overall health of a client. Along with a ranking scale, consider having a color code so you can evaluate individual clients or whole groups of clients at a glance.
Stay on Top of Customer Health and Satisfaction With Clear Scoring Systems
When customer retention is a priority, you need to have metrics driving your efforts. A clear customer health score lets you and your team understand where a client account stands, know when it's time to intervene, and better predict goals and revenue for the upcoming quarter. Kapta's KAM software is built to help your team prioritize retention through strategic account management tools, easy customer health score options, and the infrastructure to stay on top of gathering customer health data. Contact us today to learn more or to see our software in action.
