Customer Health Score

Also known as: Health ScoreCustomer HealthAccount Health ScoreUser Health IndexCHS

Health Score = (Product Engagement × 0.4) + (Relationship Signals × 0.3) + (Business Outcomes × 0.3)

💡The Concept

A Customer Health Score is a composite metric (typically 0-100) that predicts whether a customer will renew, expand, or churn. It combines product usage data (login frequency, feature adoption), engagement signals (support tickets, NPS responses), and business outcomes (ROI achieved, time-to-value). Gainsight data shows that accounts scoring above 80 renew at 96%, while accounts below 40 churn at 55%. Proactively reaching out to at-risk accounts can save 20-30% of them.

⚠️The Trap

The trap is building a health score based on vanity metrics like 'total logins' instead of value-delivered metrics like 'completed workflows.' A customer logging in daily to export data to a spreadsheet (because your reporting is broken) looks 'healthy' by login frequency but is actively seeking alternatives. Similarly, weighting NPS too heavily ignores that a promoter (NPS 9) with declining usage is more at-risk than a passive (NPS 7) with increasing usage.

🎯The Action

Build a weighted health score with 3 categories: (1) Product Engagement (40% weight): DAU/MAU ratio, core feature usage, breadth of feature adoption. (2) Relationship Signals (30%): NPS/CSAT trend, support ticket sentiment, executive sponsor engagement. (3) Business Outcomes (30%): ROI achieved vs promised, time-to-value, expansion usage. Score each 0-100, weight and combine. Set alerts: Green (70+), Yellow (40-69), Red (0-39). Review all Red accounts weekly with a playbook for intervention.

⚡Pro Tips

Recalibrate your health score quarterly by comparing predicted vs actual churn. If your model says 85/100 accounts are healthy but 15% still churn, your weights are wrong.

Track health score velocity (trend), not just the absolute number. An account dropping from 85 to 65 in 30 days is more at-risk than one stable at 50 for 6 months.

Add 'negative signals' with outsized weight: competitor mentions in support tickets, admin password resets (someone new is evaluating), CSV exports of all data (migration prep).

🚫Common Myths

✗Myth: “High usage always means a healthy account”

✓Reality: Usage without outcome is a red flag. A team using your project management tool 8 hours/day but consistently missing deadlines isn't getting value — they're just stuck. Measure outcomes (projects completed on time), not activity (hours spent in app).

✗Myth: “You need machine learning to build an effective health score”

✓Reality: Start with a simple weighted average of 5-8 signals. Gainsight, ChurnZero, and Vitally all started with manual scoring rules. ML adds 10-15% accuracy improvement but requires 10,000+ data points. Simple rules get you 80% of the way with 1% of the effort.

📈Industry Benchmarks

Health Score Distribution (% Green)

B2B SaaS, mid-market accounts ($10K-100K ACV)

Elite

> 75% Green

Good

60-75% Green

Average

45-60% Green

Needs Work

30-45% Green

Critical

< 30% Green

Source: Gainsight 2024 Customer Success Benchmarks

Intervention Save Rate

At-risk account recovery (Red zone accounts)

Elite

> 35%

Good

25-35%

Average

15-25%

Needs Work

8-15%

Critical

< 8%

Source: ChurnZero 2024 CS Industry Report

🧪

Knowledge Check

Account ABC has a health score of 82/100. However, their DAU/MAU ratio dropped from 45% to 22% over the last 60 days, while their NPS score remained at 8/10. What should you do?

🧪 Challenge a Friend