The rise of the subscription-based economy has fundamentally changed the way businesses operate. Customers today prefer access over ownership, opting for on-demand services rather than committing to long-term product ownership. This shift places the burden of ongoing value delivery on businesses—customers will only renew subscriptions if they consistently see value. In this landscape, customer retention is more critical than ever, and tracking customer health is essential for ensuring long-term success.
Why Measuring Customer Health Matters
Since customers are no longer tied down to a product, their loyalty depends entirely on their experience. Businesses must proactively monitor customer satisfaction to prevent churn and maximize lifetime value.
A Customer Health Score (CHS) helps companies:
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Predict customer retention and churn risk.
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Identify opportunities for upselling and expansion.
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Improve customer engagement and satisfaction.
Defining Your Own CHS
There is no one-size-fits-all formula for calculating CHS, as retention drivers vary across industries. Businesses must customize their CHS model by integrating both subjective metrics (e.g., customer sentiment) and objective data (e.g., product usage). A well-defined CHS provides a holistic understanding of customer relationships.
3 Key Data Points for Customer Health Score
To ensure reliable customer health tracking, companies should include a mix of financial, CRM, and product-usage data. Here are three key data points that are essential for CHS:
1. Net Promoter Score (NPS)
NPS measures customer loyalty and sentiment by asking one simple question:
"On a scale of 1-10, how likely are you to recommend our brand to a friend?"
How NPS is calculated:
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Promoters (9-10): Loyal customers who actively advocate for the brand.
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Passives (7-8): Neutral customers who are satisfied but not enthusiastic.
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Detractors (0-6): Unhappy customers who may spread negative feedback.
The final NPS score is determined by subtracting the percentage of detractors from the percentage of promoters.
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Positive NPS: More promoters than detractors (Good).
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50+ NPS: High customer satisfaction (Excellent).
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70+ NPS: Strong brand loyalty (World-class)⁴.
2. Product-Usage Data
Product usage provides insights into customer engagement levels and predicts retention or churn risks.
Key indicators include:
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Frequency of usage: Customers who log in regularly are more likely to renew⁵.
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Key feature adoption: Tracks whether customers are using differentiating features.
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Product stickiness: Measures how deeply integrated your product is into the customer's workflow.
Businesses can analyze these behaviors to optimize engagement strategies and enhance product adoption⁶.
3. Support History
Customer support interactions can reveal pain points and friction areas that impact satisfaction.
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High support ticket volume may indicate a need for additional training or onboarding.
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Response time and resolution quality influence customer perception.
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Severity of tickets matters—delays in addressing high-priority issues can lead to churn⁵.
By analyzing support trends, businesses can identify patterns in customer frustration and take proactive steps to improve experiences⁷.
Final Thoughts
In the subscription economy, strong customer relationships drive business success. A well-structured Customer Health Score provides valuable insights into customer engagement, satisfaction, and retention potential. However, its effectiveness depends on choosing the right data points and continuously refining the model. By leveraging NPS, product usage, and support data, businesses can proactively manage customer health and ensure long-term growth.
References
[2] https://www.wootric.com/blog/customer-health-score-advice-from-three-customer-success-experts/
[3] https://medium.com/customer-s-success/creating-a-customer-health-score-1dfd5ff02881
[4] https://www.questionpro.com/blog/nps-considered-good-net-promoter-score/
[5] https://useriq.com/customer-health-score-churn-indicators/
[6] https://www.typeform.com/blog/guides/customer-success/track-9-customer-success-metrics/
[7] https://blog.calendly.com/4-data-points-to-use-to-assess-your-customers-health/
