Learn how to calculate and improve your customer health score.
Most businesses that lie in the “small company going big” part of the spectrum fail to understand that growth is not only about customer acquisition. If not more, customer retention is just as important.
As a business, you might be running multiple campaigns to get customers to visit your store. And when they visit it, you capture contact details from a lot of them and create a huge contact list.
But how often do you check the health score of that list? Probably never. And not checking the customer health score might be one of the reasons for a high churn rate.
In this blog, we’re going to discuss all about customer health score and how you can measure it. Moreover, we’ll also share a hack to make your customer list healthier.
Let’s jump right in!
You must’ve noticed the “Check Engine” light in your car. When it’s blinking, there are only two possibilities. Either your vehicle has detected a fixable malfunction, or it’s time to take the car off the road.
Your customer health score is quite similar to the check engine light. It keeps track of customers’ relationships with your brand. And indicates whether or not you can expect them to keep your business running on the road.
Customer health score, in short, is a metric that helps you determine whether a customer will do more business with you or is planning to dump your brand.
This metric is quite helpful for account managers and customer service teams as it lets them know when there’s a risk of churn out. The executives can increase their effort on high-risk customers and get them to do more business.
Now, the measure of customer health score varies for different industries. It depends on the customer behavior metrics that are most valuable for a business.
Here are some metrics that you can include to measure your customer health score:
- For how long they’ve been your customers
- Product usage and purchase frequency
- How often do they reach out for help
- The sentiment behind their customer feedback
- Their activity on the website
- Participation in marketing campaigns (e.g., referring their friends)
- Product upgrades and renewals
These are only some of the metrics that you can include. The list can be quite extensive and different depending on the business’s goals. We’ll discuss more about how to measure customer health scores later in the blog.
The only sure-shot way to succeed in the eCommerce business is by listening to customers and making them feel heard. And a customer health score is a quantified metric that considers customers’ feedback and experiences.
Here’s why it’s important for businesses to measure it:
With customer health scores, businesses can view multiple important metrics at a glance. And because the scoring system is personalized for business goals, it gives businesses a chance to make positive changes.
Let’s say there’s a customer who’s constantly reaching out to the support team for the same reason. It means the customer service team is not able to provide the right solution. Such customers can get annoyed, leave bad reviews, and might never return.
Customer health scores can give you insights about such customers at the right time. You can find out the reason behind why the problem is unsolved and can fix it. It’ll help you retain a customer.
Initially, the customer health score will only tell you which customers might leave your brand. But as you start keeping a consistent track of the numbers, you’ll start noticing the patterns.
Whenever you test out new CX strategies, the health score list will respond to it. It will help you identify the things that you’re doing right and the things you should avoid.
Once you start analyzing your customer health score on a granular level, you’ll be able to identify the customers who’re more likely to churn out even before they themselves have decided it.
And after identifying such customers, you can take proactive steps and measures on a per-customer level to ensure that they keep using your products and services.
Setting up a customer health score allows you to identify healthy customers — customers who are loyal to your brand. These are the customers who you can use as ambassadors for your business.
You can ask them to leave a review on your store or on third-party review sites in return for store credits or rewards. And they’d be happy to do it. The point is a healthy customer will always be more beneficial for your business than an unhealthy one.
Convinced about tracking customer health score but not sure where to begin? Let’s see how you can measure it for your business.
Okay, so now we know what we’re dealing with and why it is important. But how do you calculate customer health score in a way that benefits your business?
Firstly, there’s no specific formula for it. You can follow a template of picking the valuable metrics, then putting those metrics in a scoring system, followed by segmentation and visualization.
Let’s discuss these steps in detail.
Before you decide on the metrics for health score, you need to set a goal. What are you going to use the customer health score for? To identify churn, to assess the customer loyalty program’s strength, or for something entirely different.
Based on this goal, you need to pick the right metrics that fit with your greater customer success strategy. For example, if you want to keep track of how satisfied your customers are, you can include metrics like NPS, CSAT responses, and the number of times they reach out to the support team. This will give you an idea of how satisfied customers are with your products/services.
To summarize the customer’s experience with your business, you can create a scoring system that takes into account the selected metrics.
For example, if a customer returns to your website multiple times in a week, the system will increase their score. On the other hand, if a customer submits negative feedback and responses, their score will decrease.
The goal of this system is to provide an overall score that reflects the customer’s satisfaction and the likelihood of continuing to do business with you.
If a customer has a positive score, it may indicate that they are happy with your products and services and are most likely to continue doing business with you. However, if their score is negative, it may be a sign that they are considering switching to a competitor.
After establishing your scoring system, it is important to gather data to ensure that it accurately reflects customer perception. You may need to test various combinations of metrics to find the best fit for your business.
Once you have collected a sufficient amount of data, you can divide the scores into categories based on the number ranges. For example, you may consider scores from 75-100 as “healthy” and those in 0-50 as “unhealthy.”
You can then calculate the average score for each category to create benchmarks for your data. This will allow you to visualize and analyze the data in a meaningful way.
One of the major reasons for tracking customers’ health scores is to keep the contact list healthy. A healthy contact list ensures that your emails are reaching the right people only.
So, while setting up your scoring system, you should keep the NOPE framework in mind. NOPE acronym stands for No Origin, Permission, and Expectation.
This framework says you should not send emails to customers:
- If their data originated from an unknown source
- If you don’t have explicit and verifiable permissions to reach out to them
- If you’re going to send something that customers don’t expect from you
Only if all of the above parameters are met should you send emails or messages to your contact list.
One great way to verify the origin, get permissions, and have clear expectations is by setting up a Shopify customer account page. We’ll discuss more about this in the upcoming section.
In the final step, you need to visualize the customer health score data. It will ensure that everyone on the team can determine the health of an individual customer just by taking a quick look.
Finally, the section you were waiting for — the hack to improve the customer health score.
According to the NOPE framework, businesses must have the origin, permission, and clear expectation from the customers’ end to send them an email. By setting up a Shopify customer account page, businesses can get access to all these details.
The origin is verified when customers sign up. Using pop-ups, the required permissions can be gained. And during the onboarding process, you can also set the expectations right.
Here are some more reasons to set up customer account pages for better health score:
Firstly, setting up a customer account page gives you an area where customers can submit their detail that you can use later for contacting them.
Plus, they are prompted to sign up with an email or social handle and followed by an authentication process. It ensures that only true customers sign up and there are no fake details in your contact list.
And because the details are coming directly from your store, you know that the source is known and trustable. It solves the first point of the NOPE framework — the origin.
If you want to sell more to the same customers, it is essential to know more about them. Having just the name and contact details can only take you so far.
The customer account page data include the demographic information of the customers, including their age, gender, location, and interests. You can use this information to tailor messages, experiences, and campaigns toward the segmented group of customers.
When you set up a customer account page, you give your customers an option to add products to the wishlist. Moreover, you can also track the products they’ve viewed recently. This allows you to determine if they still have an interest in what you have to offer or not.
For example, if a customer hasn’t added any product to their wishlist or explored your store in a long time, it probably means that they’ve moved on. They are no longer interested in what you offer.
A customer account page also allows you to keep track of customers’ past purchases. Using the order history, you can find out if there are products that a customer tends to reorder. If there is, they are loyal to your brand.
On the other hand, if a customer has not purchased from you for a long time, you can put a negative score on them because you’re at risk of losing them.
Moreover, order history can also be used to recommend the right product. Let’s say you run an electronics store, and a customer has purchased a mobile phone from you. After some time, you can recommend them a screen protector for that particular phone or a power bank. It helps you upsell.
The number of times a customer logs into your store has a lot to say about how healthy their score is. A customer who logs in 5-6 times every month is far more valuable to you than someone who barely logs in.
You can increase the health score of customers who don’t log in by giving them discounts or store credits on their next purchase. They’ll be tempted to explore the products and will probably end up buying something.
When a customer’s health score is high, they are usually happy doing business with you. And the healthier your customer list is, the better will be your understanding of them.
When you have a clear picture of your happy customers, you’ll be able to create better campaigns to make them even happier. It’s a win-win!
But this doesn’t happen overnight. You’ll need a lot of quality and verified data, and the customer account page will help you achieve this.
This is where Flits comes in. It allows you to collect all the data you need from your customers. You can look into order history, track their login frequency, and much more.