Is Customer Health Score the same as Likelihood to Renew?

User: "Lauren Mecca"
Updated by Heather Wendt

I heard someone define Customer Health Score as a separate thing from % Likelihood to Renew. I've always treated them as the same thing with my startup teams, assuming the purpose of a health score is to track towards (and ultimately predict) retention. I'd love to hear your thoughts and experiences - can they measure 2 different things?

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    User: "David Ellin"
    Updated by unknown

    Exactly. I lost an extremely happy customer in an acquisition. Co tinted the relationship and Re-signed the person at her new company. 

    User: "David Ellin"
    Updated by unknown

    I’m with @Jay Nathan on this. I think they overlap but are different. 

    User: "Lauren Mecca"
    Expert
    OP
    Updated by unknown

    Thanks @Ed Powers. I really like the earned trust factor for the health score.

    User: "Ed Powers"
    Expert
    Updated by unknown

    Hi @Lauren Mecca. I think the onus is on Customer Success to figure out why customers leave and why they stay. These factors belong both in the Health Score and for forecasting the likelihood of churn. Logistic regression is a handy, data-driven way to reduce reduce the number of factors while improving predictive accuracy in the model. Your mileage may vary, but in my experience, Customer-product fit, Customer goal achievement, Time-to-Value, earned trust, and champion/economic buyer turnover are reliably among the top few leading indicators. 

    User: "Andreas Knoefel"
    Updated by unknown

    Exactly! I had very healthy customers churn for reasons outside of our control

    User: "Kevin Mitchell Leonor"
    Updated by unknown

    It’s certainly a great indicato, but there are other factors that a CHS does not tell us.

    pending mergers

    loss of champion

    competing technology

    price elasticity

     

    just to name a few

    User: "[Deleted User]"
    Navigator
    Updated by unknown

    I think of these as two separate things. Health KPIs being what trigger specific playbooks, Likelihood to Renew being what feeds the renewal forecast. Health KPIs can feed into renewal forecasts. 

    I'm not a fan of rolling up a singular health score across all the different KPIs. I've rarely seen where this is understood by the team, accurate, or a good predictor of retention. 

    Instead, I look at upcoming renewal dollars broken down by particular types of risks to renewal. 

    User: "WillowMoellering"
    Thought Leader
    Updated by unknown

    Great question Lauren!  Healthscore can (and should) be used for likelihood to renew, but it is most valuable as an actionable leading indicator of risk.  If you just focus on just renewals, the customers that are more than a year from renewal can get ignored, and then before you know it their usage has declined and they start using a different product.

    Healthscore can be broken down into different categories, and they aligned with actionable playbooks.  Here is an example of categories: 

    • Support Interaction
    • Product Usage
    • Opportunity
    • Value
    • Customer Sentiment
    • Relationship

    Simply, a customer should never churn without being red for months before and playbooks engaged based on those health changes.