How to define your customer's health?

You are a B2B Saas in need of becoming more proactive. Improving your Customer Success team organization might be the solution. It does not have to be a mountain to climb though since you just have to find ways to understand your customers and to define their health. In this article, we will show you how to define the health of your customer's thanks to your customer data.

A Saas company is using more than 15 Saas on average (CRM, Support ticket tool, billing product, etc). Once your Customer Success team grows, one of the key challenges you’re quickly exposed to is managing to have centralized access to all this information in one place.

In addition, having a growing CS team means more accounts to handle, right? You certainly won’t have time to manually check all the different tools, compile all the info and make a report.

That’s the exact reason why not using a Health Score or a warning system is a mistake. We can think of two reasons to explain it:

• First, your team can’t be proactive without a clear overview of your customers' data & health. Your CSMs won’t be alerted in case of a drop in usage or customer dissatisfaction. Instead, you will require them to go check all the different information regarding their clients. By the time you become aware of a problem, it already happened. And worst-case scenario, your client has already noticed it as well. We are pretty sure you can imagine the struggle of being told about a problem by the client himself who expects you to fix it quickly, right? In these situations, you have no other choice but to be reactive about finding a solution.
• The second issue is that by working this way, you will never be able to scale your CS team. Isn’t it the ultimate goal for a scaling SaaS to be able to deal with more accounts with the same CS team? Instead, you will lose time in looking for and centralizing the information whereas you should focus on your accounts and spend time with them.

These two issues have critical consequences on your CS strategy. It becomes less efficient! Your CSMs take action too late and have less time to interact with their clients when it is the top priority of this particular team: to make your clients’ experience exceptional. And for that to happen, they need tools built to help them achieve this goal in a minimum length of time.

If you recognize yourself in these words, don’t worry, we got you covered with a few ideas to implement!

Many solutions exist, the obvious one is to implement a warning system to detect early signs of churn but it requires a lot of work, perfect knowledge of your Key Performance Indicators, and an available data team, which we all know is a busy team by definition.

All the information you may need is already on your CRM & support ticket tool.

1- Build a health score with your data

Why having a health score is a milestone for your customer success team to adopt a data-driven strategy?

You need to spend time with your customers, not spend time checking manually all the information on different apps.

Once you’ve centralized all the data on your CRM, you should create a health score to know at a glance which customers are at-risk or healthy. Better understanding your customers will make you focus on the right ones at the right time and with the adapted speech.

We will deal here with two ways of creating a health score: internal and external.

A. Internal

Your go-to team here is the data team. Make sure to define all the objectives beforehand so that your health score will be precise and on point.

We define 3 different types of signals for your health score:

• The relationship with your client: The interactions between the clients and you as a company representative. It can take many forms: the number of tickets opened, the open rate of your newsletters, the number of calls they had with their CSM, the length of time between each call… Find the best metrics that will best describe the relationship you have with your clients. We know it can vary from one B2B Saas to another.
• The adoption of your product
• The value: How much value do my clients bring me as a company? Here, consider using financial metrics such as the MRR your clients represent or the number of unpaid bills; Or quality metrics such as your NPS.

Let’s start with a unified balance, meaning each signal equals 1. We suggest you iterate for a few weeks until you get comfortable with it before changing it.

You can segment your accounts in 3 categories :

• your AT-RISK accounts
• your neutral accounts
• your PROMOTERS

Once you’ve iterated enough, it’s time for you to make the analysis: are your churners the ones you’d predicted with your health score? If so, great! It means your system works.

If they aren’t, no need to worry. Simply change the equilibrium between your signals and consider changing a few of them: add or remove some and start again!

If your data team is busy or if creating your health score seems a bit complex, you can always ask experts to do it for you.

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B. External

• Building an operational and understandable health score is complex and time-consuming. Companies don’t know which information to use and to which data it may correspond. Then, they don’t know how to rule all these features, nor where to add a threshold to get a relevant alert system.
• Data teams are usually very busy, and CS teams generally give priority to the product rather than the implementation of a relevant health score.

By using an external service, you will benefit from outside expertise and thus gain both quality and rapidity. Some experts offer to carry out an audit of your data to understand deeply how your business works and then to create a highly relevant health score within less than a month. Indeed, they will pick the right signals for you, the adequate balancing, and, this way, create the right health score for you.

We noticed that more and more companies are looking for solutions to answer the need of having a health score, like Nalia.

2- Implement an early warning system to be more proactive

Before digging deeper here, let’s remind ourselves what a warning system is: it’s a procedure that will send you daily or weekly (depending on how you set it up) warnings about clients that may churn or be subject to upsells.

The main advantage is the time and productivity saving. Indeed, you won’t have to manually check all your accounts but instead, only focus on the one brought to your attention by your warning system. The main advantage is that you’ll be able to focus only on the customers that have been flagged. On average, a B2B SaaS will receive alerts on 12% of its customer portfolio each month. Thanks to this new information, CSMs will be able to spend more time on these accounts and will answer their problem before the client’s request.

Here are a few tips if you want to implement a warning system:

• Define a set of metrics and write them down on a spreadsheet. Your metrics can be about customer success, product adoption, product use…
• Define the thresholds for each metric: ask yourself what is the threshold for each metric below which we consider clients being at risk.
• Update your spreadsheet weekly. You can do it manually or using Zapier.
• Implement internal automatic mailing campaigns for each metric when it gets below the strategic threshold. This way, you will get alerted to anything of importance: Let’s say if your health score gets below 30%, you want to get alerted and understand why.

As for building a health score, you can also work with an external solution to build your health score. It may save you time and improve the efficiency of your early warning system!

It goes even further than simply implementing such a warning system. Adjust yourself to it and make it a new routine. Thanks to these alerts, make it a habit to only focus on the clients that need you at a particular time!

Consider checking your data again every 3 months and adapt your score at least twice a year. Any internal strategic change or external event can have an impact on your score. Do not forget to take these into account when you reevaluate your data.

In addition, customer data evolves. We suggest you do a round of checking on all your attributes every 3 months, even if it’s just to verify they are all in accordance with your other tools and that they remain close to reality and your context. To do so, we recommend a quarterly meeting with your Ops and/or Data teams. We also advise you to check the weight of your attribute twice a year.

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By using a health score and an early warning system, you should be able to adopt a data-centric customer success strategy and become much more proactive! If you have any questions, do not hesitate to contact us!

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