Including Competitors in Health Score

Joseph Beker

Good Morning-

We are in the process of implementing with Gainsight and building out our health score. One of the items we would like to be factored in is competitive threats. I'm looking for some insight as to how others have factored this into their health score as we consider some competitors riskier than others, and we haven't found a great way to build the score to accommodate this. 

We're entertaining the idea of weighting certain competitors as heavier based on their known risk, but interested to see how others may have dealt with this or if there is another way we should be thinking about it. 

Thanks!

Rich Rans

We use competitive intent as a signal to ask the customer a question.  Incorporating it into a health score relies too much on you getting identification, the list of competitors and weighting exactly right.  

I think about it as 2 separate indicators:

• is the customer effectively using our platform and getting value
• is customer showing intent on competitive products and/or expansion into other product lines

James Conant

Keep in mind a health score is a directional metric intended to gauge the risk that is best evaluated within context, not as a standalone absolute. The higher the score the more likely a customer will become a high-value repeat customer and advocate. The lower the score the more likely they will term and go to a competitor either on their own or due to a takeaway.  If your service is driving value for your customer with minimal friction your competitors will have a difficult time taking them unless there are other factors that need to be assessed that are better analyzed outside the score - price, integrations with other platforms, functionality, industry, segment, etc. For example, I may learn from a customer that they've been approached by a competitor offering a lower price. That information doesn't need to be an aspect of a score (though it can be used with a score). Rather, its intelligence I can share within the business that can then be utilized to drive strategy. Maybe certain segments are vulnerable, or industries or a sales strategy is a bit off, or product capabilities need to be enhanced, or market alliances formed, pricing tweaked, or you need to do a better job educating your customer on the value of your service (I've seen that). etc.

Ed Powers

We used an "ease of switching" factor in ours. Loyalty research suggests it's a moderating factor in customer loyalty, and it incorporates competition, risk and cost the customer must deal with to make a change. Use a scale, such as 1-5 or 1-7 where 1=no alternatives and very costly and risky to 7=easily switch in a matter of minutes for free. 

Rather than go through the hassles of collecting and integrating data in Gainsight for an unproven metric, instead run an experiment and use statistical analysis to determine if the factor has an impact on the outcome. Use multiple regression for revenue and logistic regression for logo churn. 

Also, I just uploaded an Excel spreadsheet to the resource library in GGR that can help. It uses statistics to determine the validity and predictive power of your customer health indicators, regardless of how they were calculated. At the end of the day, the goal is accuracy predicting customer behaviors, and if this or any other factor doesn't contribute to that, then experiment with others that do.  

Kevin Mitchell Leonor

I like the idea. I think it would be more impactful if we identified if the risk is credible and there are ways to do that. Example: documenting if a customer asks about a feature that a competitor has. Even if you already have that feature, it shows that the competitor has the attention of the customer.