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How to measure customer health

A customer health score is a crucial business metric for customer success and growth but where do you start? Here's a guide to walk you through the process.

Jo White · July 11, 2019
How to measure customer health

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When you start up a business with a small customer base, you work so close to them, you tend to just know how they’re feeling about your product or service.

But as your customer base grows, it’s impossible to manage each relationship so personally and you can miss important signs.

That’s when a customer health score becomes a crucial business metric for growth.

What is a customer health score?

A customer health score measures the likelihood of a customer leaving or becoming a high value advocate.

It’s a key business metric as it gives you the opportunity to turnaround an unhappy customer and it helps you identify the characteristics of a high value customer too.

Your customer health score metrics will be unique to your business, there’s no industry standard to follow. But here are some areas to consider when you’re starting to build one.

The healthy and unhealthy customer

To define a customer health score for your business you first need to understand what your successful and unsuccessful customers look like.

A customer is successful if they’re getting value from your product or service. The opposite is true for unsuccessful customers and they are usually referred to as ‘at risk’.

To understand what characteristics make a customer fit into one of these categories, you can look at your most successful customers and those you have lost. When you analyze them, you’ll easily see the traits that make a customer succeed and leave. This is a great starting point as it gives you a clear benchmark.

When you start listing these traits, it’s best to keep the list between 3-7 characteristics at first. The smaller the better. It’s important to keep the list simple so you’re not overwhelmed with data.

Once you’ve identified the characteristics, you can start to define the key metrics for your health score.

If we look at a SaaS company as an example, a successful customer may do this:

  • Log in regularly
  • Use sticky features
  • Have at least two integrations
  • Invite 1 new user per month

So these are the priority metrics you need to consider when building your ‘healthy’ score.

Building a health score isn’t a perfect science and may need a lot of tweaks throughout the process. But the closer you are to your customers and products, the more chance you have at creating an accurate model.

Example health score metrics

Once you have your list of characteristics that define a healthy or ‘at risk’ customer, you have your metrics. They will be unique to your products and services. What’s super important for one company, may not be considered in another.

You can choose to track just one score for every customer, or you could segment your audience on business size, the stage of the customer life cycle etc, and have a different health score for each.

Whichever way you structure your health score, here are some of the common metrics used in business.

Frequency of visit

How often a customer buys your goods, visits your store or if you’re a SaaS business, logs into the platform, is a useful metric for your health score. But, as with all the metrics you can’t believe everything you see.

A person who isn’t logging in every day isn’t necessarily ‘at risk’, they could be on holiday or only need the software at specific points in the year. Likewise, if someone is logging in every day, it doesn't always mean they are using the software in the right way and getting great value.

While product use is important, it’s also wise to look at the context around the behaviors before jumping to conclusions.

How much do customers need you?

It’s useful to consider the behaviors that indicate your product or service is integral to your customer’s life.

The more involved a customer is in your business, the more difficult it will be for them to move to a competitor.

If a SaaS customer, for example, integrates most of their core business tools into yours, it will be much harder to move to a competitor. They will have to unpick all the technology and start again, which isn’t an attractive option.

While you should never rest on your laurels, measuring this will help you prioritize your customer success activities.

Customer satisfaction

Even though a customer may score well on most of your metrics, you can’t automatically presume they are a healthy customer. As referred to in the examples above, even though they are regularly logging into your software, are they are actually satisfied and happy?

It’s crucial to consider this question and find a way to measure customer satisfaction. If people refer your product, that’s usually a good sign and a useful behavior to measure.

A SaaS business can measure this using a Net Promoter Score (NPS). There will be a tool in your industry to measure customer satisfaction too.

Customer relationships

Your customer point of contact in a business is a crucial relationship. Once it’s established, regular conversations will flag potential issues with the account that the metrics may not pick up. There should be an area in your health scoring calculation that takes account of this knowledge.

It’s good to have a range of close relationships with people across a business, the more fans you have, the better. After all, your point of contact may leave the business one day so it’s useful to know there is someone else to champion your product or service. It reduces the risk of losing them.

Whilst it’s good to have a mix of advocates throughout a business, it’s useful to have some at a senior level too. When there’s executive support for your product, as well as at ground level, it lessens the risk of the business leaving. There’s never a big drive to change the things the boss loves.

The human element of a health score

As you build closer relationships with your customers, you’ll begin to understand how they work and hear of any struggles they’re having at a macro level. This information counts too. In some instances it could overwrite all the metrics you’ve gathered above.

For example, if you hear big structural changes are on the horizon or a CEO is leaving, while the customer may say there’s not an issue, such change does bring about risk. It may be worth staying close to that customer and supporting them through the turbulent period.

Conversely, if the metrics are looking bad for a customer but you know they’re in the middle of a big office move, you may not need to be overly concerned.

Common sense should always prevail when monitoring a health score.

More useful metrics

With such a range of metrics at your disposal, here are a few additional points to consider when creating your list.


If a customer starts to change the way they pay you, it’s worth taking a closer look. For example, a customer credit card could decline or they could start to ask for more detailed invoices before they pay. Depending on your business, this could be a crucial metric to track.

Marketing engagement

When a customer interacts with all your marketing activity, whether it’s competitions, attending events or reading newsletters, it’s a positive sign they’re happy. If you have ways of easily tracking this activity, it may be worth adding to your list.


Tread carefully with loyalty as it can be an ambiguous metric. For some businesses a regular repeat purchase shows a customer is enjoying your products and is healthy. However in other sectors, such as tech, it could highlight a customer is ‘at risk’ as it signals inertia and they could become an attractive target for your competitors.

Calculating your health score

The health score calculations are unique to your business and products. Once you know the benchmarks for a healthy and unhealthy customer you can clearly see which metrics are the most important and you can weight them accordingly.

The exact calculation you use to calculate your health score will be completely tailored to your products and your customers.

Generally an overall customer health score rating is given as a percentage and classed as Red, Amber or Green.

Red flags ‘at risk’, Amber shows all is ok, Green indicates a healthy customer. An example of the percentage ranges for each could be:

  • Red (0-35%)
  • Amber (65-70%)
  • Green (70-100%)

The calculations to reach the Red, Amber, Green rating can be as simple or as complex as you wish. You can either create the formula yourself or invest in a specific tool to do it for you.

Remember, even if a customer is red, it doesn’t necessarily mean they’re about to leave nor if they’re green does it mean everything is perfect. It’s a flag to alert you to dig a bit deeper. Always ensure there is room for human input into the figures when you calculate your score.

Improving a customer health score

As mentioned earlier, when a customer is flagged red it’s important to delve into the data to find out ‘why’ before you take action. This is when it becomes useful to centralize your health score alongside other customer data, such as in a CRM. It will be easier to see the context, review any interactions, the type of support tickets sent, the tone of the message etc.

To efficiently respond to any customers suddenly flagged as ‘at risk’, you may wish to automate a playbook that kicks into action as soon as they turn red. Don’t forget to interact with the data and understand the context as part of this process. Whilst you can standardize an approach, each customer is unique and will respond better to more personalized messages.

Depending on your business type, the channels you use to interact with ‘at risk’ customers may vary too. Face to face can work extremely well for a small customer base but it’s untenable if you have tens of thousands.

The size of your customer’s account may also play a part in how you respond as you may choose different resources for smaller and larger accounts.

If you do use a CRM, like Capsule, you can store these playbooks centrally so everyone can follow a proven approach to help an ‘at risk’ customer become healthy.

Tools to help you calculate

The simplest tool to calculate a health score is a spreadsheet, it’s where most people start. As with all data, you’ll reach a point when you’ll have too much to manage on a spreadsheet, which is when technology can help.

By bringing your health score into your CRM, you’ll get a holistic view of your customer as you'll see the score in context. And when you do improve the score of an unhealthy customer, you’ll be able to track the activity that had the most impact and easily replicate it for others.

A customer health score is always a work in progress. You may find that what works today isn’t relevant in six months time. Be prepared to change and respond to customer and employee feedback throughout the whole process.

Good luck with your customer health scoring and if you need a place to store your calculations, why not try Capsule for free.

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