Why Overly Complex Health Scores Send the Wrong Signals

By June 17, 2020Blog

Without data, gauging customer success and account health is difficult. However, if you overcorrect and inundate yourself with information, you’ll likely find yourself frozen as well. Particularly with health scores, more data points is not merrier. So how do you find the goldilocks sweet spot of customer health scores? Let’s explore. 

How complex health scores may hold you back

Customer health scores are data-driven indicators of an account’s churn risk. Rather than relying on subjective opinions about how well a user is doing, considering usage and sentiment metrics helps you maintain consistent scoring across your user base. 

Once you decide to create a comprehensive health scoring process, it may be tempting to keep adding metrics. The problem with overly complex health scores is that they could become less and less actionable, which doesn’t help your team much. 

Here are some of the issues you could encounter with customer health signals that uses too many variables or advanced calculations:

You may unnecessarily calculate metrics that don’t directly impact churn

Without testing your assumptions about what factors signal an engaged user, you’re guessing and checking. While it’s okay to have a data review process that still needs to evolve, it’s best to limit your focus. 

If you start with way too many metrics, you risk wasting time pulling in data points that don’t make a significant distance. When in doubt, it’s best to start with fewer metrics that you’re confident correlate with churn risk. 

Those less impactful metrics could drown out the data points that matter

Chances are, the more metrics you consider, the “smoother” your scores will be. That is, by considering a wide range of data points, you could use metrics that cancel each other out or drown out important info. If every data point is weighted equally, then more data points means a dwindling share on the few important figures. 

Plus, if health scores are complicated to calculate or update, you may avoid it

Don’t worry, I’m not calling you lazy or accusing you of not doing your job. It’s just that when your schedule is already filled, anything that feels cumbersome without an equal pay off will fall in priority. More components in your health score could mean going to additional data sources or wrestling more complex spreadsheets. 

The best health score process is the one that you’ll use, and if that means it starts simpler, so be it. 

Finally, it may be harder to pinpoint the issue within a complex health score

Say you get an alert because a health score has fallen below a certain level or you notice a new bath of accounts has slipped into the “at risk” zone. If you want to take the best next steps, you need to have an idea of what the issue is. Being able to easily find which metric is bringing the health score down helps you start your exploration. 

The five elements of a simple, yet actionable, health score

A complex health score can weigh down your resources and get in the way of seeing what’s wrong and acting on it. So how do you build a simple, yet actionable one? Here are the five churn indicators that UserIQ’s health scoring tool use:

Login activity

It’s impossible for a user to be gaining value from your product if they aren’t logging in. Therefore, we use the frequency of logins as a leading indicator of churn. If the amount of times a user or account is coming back is on the decline, it could signal trouble. 

Feature adoption

Your company has a lot to offer, and hopefully each user is taking full advantage of your features. By considering feature adoption, or how many unique features each account is using, you can gauge if they need to be re-introduced to core tools. 

Sentiment

You can gauge how users feel about your product and company with Net Promoter Score (NPS) surveys. Not only can these scores help you find promoters and detractors, but they can also signal growth

Technical support

If a user doesn’t get help in a timely manner, they could get frustrated. Plus, a sudden uptick in service tickets could signal trouble in paradise. Tracking technical support gives you an idea of how often users are reaching out for help. 

Financial Health

UserIQ’s health score doesn’t weigh financial health as highly as other factors, but it’s still important. Financial health is based on monthly rates, whether payments are made on time, and if the card on file is still active. 

Auditing your own health scoring process

Perhaps you’re not satisfied with your current customer health score process—that’s okay! Your first step to improving your customer success data is to audit yourself. Here are some questions to ask yourself:

  • What is your current health scoring process? What goes into it, who is involved, how often you check, etc. 
  • Do you use subjective measures or scores, or is it strictly based on data, or perhaps a combination of both? If you only have subjective “red,” “yellow,” and “green” scores right now, what metric can you add in first?
  • How many factors are included in your current health scores? How are they weighted?
  • How do you act on health scores? At what point do you follow up, and how?
  • What have been the ultimate outcomes of customers you thought had good and bad scores? It’s good to check assumptions against reality. 
  • Are you looking at health scores across different segments?

Customer health scores can help you establish a single source of truth about overall customer success. Monitoring scores can also help you proactively fight churn. If you want to get more out of your customer data, UserIQ can help. Our Health IQ tools help you take the guesswork (and hard work) out of calculating and acting on customer health signals. 

Schedule a demo to see how UserIQ’s can increase your Health IQ.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.