Is Customer Health Score the same as Likelihood to Renew?

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Lauren Mecca
Lauren Mecca Member Posts: 29 Expert
edited July 2020 in Value Realization

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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  • WillowMoellering
    WillowMoellering Member, CS Leader Posts: 21 Thought Leader
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    edited May 2020
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    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.

  • Jay Nathan
    Jay Nathan Member Posts: 108 Expert
    Photogenic First Anniversary 5 Insightfuls 5 Likes
    edited May 2020
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    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. 

  • Kevin Mitchell Leonor
    Kevin Mitchell Leonor Member Posts: 248 Expert
    First Comment Name Dropper First Anniversary
    edited May 2020
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    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

  • Andreas Knoefel
    Andreas Knoefel Member Posts: 74 Expert
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    edited May 2020
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    Exactly! I had very healthy customers churn for reasons outside of our control

  • Ed Powers
    Ed Powers Member Posts: 180 Expert
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    edited June 2020
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    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. 

  • Lauren Mecca
    Lauren Mecca Member Posts: 29 Expert
    edited June 2020
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    Thanks @Ed Powers. I really like the earned trust factor for the health score.

  • David Ellin
    David Ellin Member Posts: 170 Expert
    Name Dropper Photogenic First Anniversary First Comment
    edited July 2020
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    I’m with @Jay Nathan on this. I think they overlap but are different. 

  • David Ellin
    David Ellin Member Posts: 170 Expert
    Name Dropper Photogenic First Anniversary First Comment
    edited July 2020
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    Exactly. I lost an extremely happy customer in an acquisition. Co tinted the relationship and Re-signed the person at her new company.