Customer success teams measure and track many key metrics. From SaaS platform usage to NPS, they are always analyzing data to maintain a pulse of customer health and happiness. Many of these stats will also go into an overall account metric known as Customer Health Score.

Wootric recently hosted the San Francisco Customer Success Meetup and the focus of the evening was Customer Health Score (CHS). Three experts shared their techniques for constructing and measuring this metric.  Loni Brown from Entelo, Jeff Johnson from Splunk, and Jon Turri from Raise.me offered several tips and insights to setting up a Customer Health Score program and the intricacies involved.

What is Customer Health Score (CHS)?

Customer Health Score is a metric designed to predict a customer’s likelihood to stay a customer  – or churn. Loni started by providing her explanation of what CHS is, “a metric that provides insight into what is happening in your customer accounts early enough that you can be proactive.” Formulations of CHS can be simple, but are often complex.

That description works well, but there isn’t an industry standard for Customer Health Score, which may be confusing and overwhelming for some customer success teams. The panel agreed that variables and the weighting formula for CHS vary based on the company and industry. It depends on what is indicative of success for your customers.

What Goes Into a Customer Health Score?

Each of the panelists has had to identify and gather the metrics available to them, then single out the most indicative numbers to create a formula for their score. This means the first iterations are often messy and need regular adjustment until the method produces results that are consistent with how CSMs see their accounts.

When creating your score, it’s good to isolate 4-6 indicators for CHS. Loni mentioned that the Entelo CHS score card includes eight different numbers, though she allowed that her formula is very comprehensive. Among other things, the Entelo CHS includes Net Promoter Score (NPS), the number of support tickets per user, usage of the tools on her platform, and success milestones. Entelo is a recruiting platform so in their case, success milestones include personnel hires their clients have been with the help of Entelo.

Jeff added, “Support cases are important, but they don’t always mean something is wrong” so you’ll want to keep that in mind if you add them to your formula.

The panelists discussed the subjective components of their CSH formula, suggesting that only 1-2 of your included metrics should be subjective, but that they can be quite important. For instance, Jon adds “Relationship strength is the highest weighted metric for us.”

After initially setting up your Customer Health Score formula, it’s important to give it 6-10 months without changes, or you won’t be able to track it accurately over time.

Tracking Customer Health Scores

A favorite tool for tracking CHS is Gainsight, used by 2 of the panelists. It imports metrics you’ve indicated as important and allows you to weight each parameter, culminating in a unique formula for your each customer’s CHS.

In Gainsight, you’ll see accounts that are Green, indicating good health. They could be an opportunity for an upsell or additional revenue. Yellow, which are accounts that might be experiencing a problem. Red accounts are in poor health and are at risk of churning.

Loni uses Wootric to track Net Promoter Score. She imports this NPS data into Gainsight via Salesforce for the benefit of her success team and her CHS calculation. (Having her NPS data in Salesforce benefits the sales team, too. For instance, if a client could be a potential advocate, exporting that to account and contact records in Salesforce makes it easily accessible to the client’s sales manager.)

A good indicator that your formula is working is to check positive and negative accounts and be sure the metric matches what is happening with the client. For instance, if a customer hasn’t taken training, submits multiple support tickets, and hasn’t been successful with your product it makes sense they would be in poor standing.

Optimizing your CHS can be great for revenue opportunities. Loni stated “Sales can come to me and say ‘we are trying to make quota, do you have any accounts for us?’ and I can print out of a list of green accounts and hand them over knowing they are good prospects for upsells.”

When our host was asked by an audience member what impact panelists had seen on churn and expansion revenue, Jeff answered, “You’ll see an immediate impact when taking immediate action.”

Set Up Customer Health Alerts

Once you’ve chosen the metrics for your score, you’ll want to add alerts to your system that notify you if and when something happens. Jeff says “If anything should be a fire alarm, build it into your logic in Gainsight. Think about what those fire alarms are.”

Jon cautioned, “The CHS Scorecard won’t give you everything….you have to have an escalation process in place.”

For example, if your NPS for a particular account goes from promoter to detractor you’ll want to have a CSM address the account. This means the overall scorecard could be showing a positive account when there is a problem, so it’s still important to look at every metric on a client’s card to make sure it is in good standing.

Taking Action on Customer Health Scores

The next step after setting up your CHS alerts is to create playbooks to work from when there is an alert or an account drops from green to yellow or red. This gives CSMs valuable information to work through any problems and put the account in good standing when possible.

Jeff suggested that you focus efforts on getting yellow accounts to green. A healthy account is six times more likely to rebuy or upsell than one that is “okay, ” he says. The effort you put into getting an unhealthy red account to an “okay” yellow account may not be worth it.

As the company grows, your CHS program should as well. At Raise.me there are thousands of customers/students who use the program. Because of this Jon has learned to use segmentation. He tracks a CHS for new customers going through onboarding and a CHS for long term customers.

In one last bit of advice, Loni’s recommends to “Make sure the team and company are bought into the score or people won’t act on behalf of it.”

Thanks to our panelists, it’s clear how valuable and productive Customer Health Score can be for Customer Success teams. It can take effort to determine the right metric for your company, but the result can be an excellent program that decreases churn.

As a Product Manager, you develop user flows to chart how customers move from signup to successfully using your SaaS product. Your colleagues in Customer Success are doing the same thing — mapping a flow of customer milestones to success.

But “success” can mean different things to PMs and CSMs. And, while both teams employ user flows (or customer journeys), what they put on them are very different, reflecting their very different goals.

You are responsible for making the product functionally work, with enough awesome UX so it’s relatively intuitive for the customer to use. For your team, “success” often means that the product works. It does what it says it will do, and does it well.

Customer Success is responsible for helping customers use the product to achieve their desired outcome. Most of the time, that desired outcome isn’t in the product – it’s outside of it. For example, if I purchase a budgeting app, my desired outcome is to save enough money to sun myself on a Caribbean beach, with a good-looking server to bring me fruity drinks with umbrellas in them. The Customer Success manager’s job is to get me there.

You might say it’s a conflict between focusing on the world inside the product and the wide, wide world outside of it.

And that conflict can bring about a deep divide between Product and Customer Success.

Yet, we’re all working towards the same goal: Creating a product people love, need and want more of.

What if you were to bring both user flows together, so the functionality inside the product meets the desired outcomes outside of the product?

The Customer Success Perspective

This is a basic Customer Success User Flow, riffing off of Lincoln Murphy’s mockup. This type of user flow shows how customers get to each successive Milestone – or the parts of the product that will take them to the next step towards reaching their Desired Outcome.

But this chart doesn’t show the most important part for the CSM: The success gaps between signup and that Desired Outcome.

It’s in these spaces that Customer Success does most of its work.

Success gaps are what stand between product functionality and success milestones or desired outcomes. My budgeting app might help me save money, but will it help me have an amazing Caribbean vacation? Of course not – the product isn’t designed for that.

But Customer Success content is designed for that. In e-books, blog posts, or social media ‘quick tips,’ Customer Success can tell me everything I need to know to successfully budget for my dream Caribbean getaway. This content can tell me things like “Don’t forget to include hotel taxes and airline fees in your budget,” or “When budgeting for vacation, experts suggest planning on spending $140 a day for food for two.”

Let’s take another example: Hubspot.

HubSpot’s product is an impressively integrated website, social media management, marketing, CRM and Sales platform. Their customer’s desired outcome is to build a successful online business. So, HubSpot’s Customer Success team created a Sales blog for salespeople, a Marketing blog for marketers, and the Hubspot Academy with certification courses in inbound marketing, email marketing, inbound sales, content marketing, sales software, marketing software, design for web and marketing agencies, contextual marketing, and HubSpot design.

They’ve created everything you could possibly need to succeed, in the real world, using their product.

HubSpot is an extreme example – most businesses don’t have the resources for anything so comprehensive. But the principle behind it is something we can all employ.

Give your customers the tools and information they need to do what they need to do.

And this is where Product comes in.

The Product Management Perspective

When you think of user flows, it is typically about what you want users to do next in the product – the functional completion of getting from A-Z.

In your user flows, you’ll see interactions within the product, with options for different paths users can take within the product.

And, once again, success gaps are between every single action.

This is often where you will insert in-app tutorials to cover the usability success gaps, but it’s not the PM’s job alone to think outside the product. That’s what Customer Success is for.

This is what I’ve been recommending to my clients

My clients often have user flows, ready-made, from their Product teams. They may or may not have user flows from their Customer Success teams – and if they don’t, I tell them to create one.

You have to, have to, HAVE TO know where your success gaps are!

Lately, however, I’ve recommended a new way to create user flows: By bringing Product Management and Customer Success to co-create a user flow together.

A user flow that shows what functionally needs to happen…

• Onboarding/Acquisition/Retention stages
• Success Milestones
• Where to move from Freemium to Paid subscription
• When to ask for Advocacy
• When to Upsell
• Markers indicating success gaps
• Where customers will find their first value, next values, and desired outcomes

It’s a user flow that brings together success inside the product with success outside of the product. And, it opens the door to getting Product’s ideas on ways to close the success gaps from within the product, and Customer Success’s ideas on how to improve UX.

What does this look like?

Something like this:

Clearly, this is a greatly simplified version of a user flow. But do you see the two sides coming together? Do you see the potential within those success gaps for Product + Success brainstorming?

And, most importantly, do you see how this user flow can actually get the user – from a Product and CS perspective – to their Desired Outcome?

Think of it this way: Every success gap presents an opportunity for Customer Success and Product to design a solution to bridge it. Sometimes that solution will be entirely on CS’s shoulders, like creating informative content, how-to’s, or videos. Other times, that solution will require your expertise to create an in-app pop-up tip, milestone celebration, or alert – and, when the success gap is a little too wide for a quick fix, a new feature or expansion.

By mapping both perspectives at the same time, you’re building the customer’s success into your process from the beginning.

The bottom line is…

If you and your Product team are only talking about the functional completion of the product, then it’s time to add a few more chairs to the conference room table – and invite Customer Success in.  Your product will be stickier when the functionality inside the product helps customers achieve their desired outcomes outside of the product.

There is a thriving Meetup group of Customer Success professionals here in the San Francisco Bay Area. Customer Success is a new and evolving field, so each monthly gathering is packed with Customer Success Managers from SaaS (Software as Service) companies around San Francisco who want to learn the latest insights from experienced Customer Success leaders. (Note: If you don’t live in the SF Bay Area, you can still benefit from the expertise shared at these monthly meetups.  Whenever possible, Junan Pang and the other organizers post a video of the event on their meetup page. )

In January, the group met up at Rainforest QA to explore a topic that is a big part of every Customer Success organization but may not always get the right level of focus…Net Promoter Score (NPS)!

Running an NPS survey program is easier than ever. No more annual NPS email survey campaigns or analyzing data in spreadsheets. A modern Net Promoter Score platform will survey your customers in real-time, start collecting data, and do the analysis for you.

Can’t get much simpler than that, right?

Actually…

There’s a lot more to NPS than what you see on the surface and every CSM knows it.

Maranda Ann Dziekonski, VP Customer Operations at HelloSign  and Jennifer Ruth, Sr Director of Customer Success at Optimizely shared how they approach Net Promoter Score and tips for getting the most from this metric including whether it should be anonymous, how to improve it, and how an enterprise company should handle feedback.

For starters, the experts shared what NPS is and how to calculate your score. While most tools will automatically calculate it for you, it’s good to know what goes into this important number because it has such a significant impact on your company.

What is Net Promoter Score (NPS)?

NPS is a one- question survey that asks: “How likely are you to recommend our product to friends of colleagues?” It is generally followed by a single, open-ended question, like “Care to tell us why?” that gives your customer an opportunity to elaborate on the reason behind their score.

NPS delivers a board-level metric and the “one number you need to grow.” The survey “metricizes” customer loyalty. It is the most important baseline metric for driving improvement in customer experience. NPS stands above CSAT (customer satisfaction) and customer health scores because it is meaningful and understood across all departments. Your NPS indicates precisely how happy your users are with your product/service, so it holds everyone accountable for customer centricity.

Why does Customer Success use NPS?

One reason Customer Success departments in particular pay close attention to Net Promoter Score is because a low NPS can be an indication of potential churn.

How is NPS calculated?

Customers rate their likelihood of recommending your company on a scale of 0-10. Survey answers 9 & 10 are considered promoters, 7 & 8 are passive, and 0-6 are detractors. You take the percentage of detractors and subtract it from the percentage of promoters to get your score. Here is more on the concept and formula.

NPS = % Promoters – % Detractors

What is an average NPS?

Everyone wants to know — how does my NPS measure up to the competition? In the tech industry, Maranda Dziekonski suggests that a score of 25-50 is average.

Why use the NPS survey?

One reason is that the non-intrusive one-question NPS survey is customer friendly, especially when compared to the user experience of traditional “This will only take 10 minutes” multi-question surveys. As a result, NPS surveys garner much higher response rates. And you want to be hearing from as many customers as possible because, as Dziekonski of HelloSign says, “80% of your detractors are tweeting complaints on social media, 80% of your promoters are those who will contribute to expansion revenue.” Knowing how they feel can help you engage with them in the right way. 

Who should own NPS in your company?

Both experts agreed that the NPS point person should be customer-facing. For example, the NPS champion should be on the customer success or support team. In their experience, other departments such as marketing are less likely to take the key step of closing the loop with the survey respondents. CSMs, on the other hand, will reach out and learn how they can keep the customer as a promoter.

What about Net Promoter Score within enterprise businesses?

Marketing, Product, Sales, Education, Service/Support, and the C-Suite are all stakeholders in the Net Promoter Score program you create. All of them benefit from NPS data. While every department should get the information, only one should own it and drive motivation for improvement. That department should also regularly track what is being done to impact and improve NPS by all departments.

How often should you ask your customers the Net Promoter Score question?

Both experts agree that no customer should be asked more frequently than every six months. However, that doesn’t mean you only execute the survey every six months. For example, if you survey a new user after she completes the on-boarding process and then survey her again every six months, you will have a constant pulse of NPS data coming in all the time from various users. However, you’ll have to decide how often works best for your company.

In-app or Email NPS Surveys?

“I get more responses from in-app users. Where with email, it gets lost in the shuffle. However, if your customers or stakeholders don’t log in to your SaaS product, then in-app won’t work and email is the way to go,” said Maranda Dziekonski.

How often should you run other surveys?

The experts agreed that CSAT should run after every contact with support. However, it’s important to schedule out how often a person will be targeted for feedback; you don’t want to over-survey customers and risk annoying them.

In addition to NPS and CSAT, HelloSign does an annual marketing survey.  Jennifer Ruth said that when she was at Adobe, they sequenced NPS with other surveys and supplemented that data with Customer Advisory Board feedback.

Therefore, it’s important for companies to have one person or function create a centralized customer feedback plan. When other departments need feedback, they can do it through that point person. There is nothing worse that overwhelming customers with too many surveys, and having a gatekeeper and a plan ensures that doesn’t happen.  “Come up with an approach that minimizes customer burden,” said Jennifer Ruth.

On Choosing the Right NPS Platform

You’ll want one that can quickly scale as you grow. Multichannel NPS tool is best. It should be easy to reach customers on your website or in your SaaS, in your mobile app, and through email.

Your NPS platform should handle sampling for you and help you analyze the data for deeper insight. For instance, you can run in-app surveys in your SaaS product and have your NPS platform automatically resend the survey to customers every six months. You might want to analyze data by certain groups — Enterprise versus SMB users, for example — and the right NPS platform will help you do this.

It is also important that your tool integrates with other platforms like Mixpanel, Intercom or Salesforce, so you can easily automate sending the survey based on customer “events” such as use of a particular feature, or a support conversation. Integrations also mean the feedback can be pushed to platforms that you and the other departments are in regularly. For example, when NPS scores and feedback are pushed into Salesforce, account managers can have more informed conversations with customers. They will know before the call if the account might be primed for upsell or need some TLC.

Should NPS surveys be anonymous?

Jennifer Ruth of Optimizely shared that at one company she worked at, the company did maintain customer anonymity. The thinking was that customers would be more honest if they knew they were not identifiable.

Most companies, however, feel that it is critical to know who the survey response is coming from. This is for two reasons. First, and most importantly, it  allows you to respond directly to the customer. You can thank them for their feedback and hopefully addressing any concerns they have. You can also invite happy customers to advocate for your brand. When customers know that their input is valued, they are more likely to respond to future surveys.

Second, knowing who responded enables deeper analysis of NPS data.  Companies often segment responses by persona, plan or other properties for deeper insight into the “Why?” behind the score.

How do you improve NPS?

Several ways to improve NPS were discussed.

The first, and the easiest way to do it, says Jennifer Ruth, is by reading through the open-ended feedback given, identifying the customer’s issues, notifying and working with the departments involved to address the issues of individual customers.

Another approach involves segmenting data –deeper research to understand which cohorts are happy or unhappy, and specifically working on strategies to respond to their input and improve their loyalty. HelloSign segments their NPS data by salesperson, CSM, and product line to thoroughly understand any trends and where there are issues with customer happiness. Since their feedback scores are not anonymous, they can also have CSMs connect with those who are detractors (0-6) to find out why their score is low and help them be more successful with the product.

Improving response rates

Everyone wants to hear from as many customers as possible. HelloSign uses this approach: Before they send an NPS survey via email, they reach out before hand and let users know how important the NPS survey is. Their users know their responses will be reviewed. They also reach out after the survey is sent to remind and encourage response.

Including a deadline for the survey has also helped encourage feedback. They found that getting the email addresses of the people who use the product — not just the person who installed it — and surveying them was critical to getting relevant responses. (In the past, HelloSign noticed that engineers who regularly install their product don’t respond to the survey requests.) 

How do you follow up with Passives and Detractors? 

The good news is that if Detractors responded, they are engaged. Do your research — look at all tickets, analytics before you reach out to the customer. Be direct and be human. People will respond to that authenticity and will give you feedback and tell you how you can help.  Make sure the customer feels empowered.

The NPS survey system is a powerful, yet streamlined way for customer success teams and companies to metricize customer loyalty and work to improve it. A Net Promoter Score program can help you keep customers happy, prevent churn, and improve your product.