Is Customer Health Score the same as Likelihood to Renew?

Lauren Mecca

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?

WillowMoellering

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.

[Deleted User]

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

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

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

Ed Powers

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

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

David Ellin

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

David Ellin

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