The customer health

score handbook
A step-by-step guide to predict customer health,
stop surprise churn, and grow accounts.
What’s inside
Customer health scores in a nutshell..................................................................................3

Common predictive factors of customer health.................................................................4

Why one health score isn’t enough....................................................................................10

Seven steps for building a customer health score..............................................................11

Tips for launching a customer health scoring program......................................................19

If asked today, could you say with a high degree of

confidence how much of your company’s recurring
revenue is at risk due to customer churn? What
about which accounts are primed for expansion?

Without a systematic way to measure the health of your customer base, you may not know where your
greatest revenue and brand-building opportunities lie. You’re effectively operating in the dark—and
that’s an exhausting and a daunting way to manage a book of business. If you identify with this as a
Customer Success leader, you might:

• Wait for risks to become reality before dealing with them.

• Devise escalation plans and account saves on the spot.

• Hear CSMs issue rebuttals of “I really thought [account name] would renew” in the aftermath
of churn.

We know the signs because we’ve been there too. In fact, it’s the entire reason ChurnZero was
created: to keep customers and keep growing. It’s as simple, and hard, as that.

If you’re tired of surprises and the unknown, a customer health scoring program can put you on a path
to predictable retention and growth. In this guide, we lay out the steps to get you there.

Health score handbook 2

Customer health scores in a nutshell
A customer health score is a value that measures a customer’s engagement and satisfaction with your
company and its product or service. Businesses use health scores to determine which customers are
at risk of churning and to target expansion efforts for their most successful customers.

Health scores can be calculated in many ways, including assigning points (1 to 100), letter grades
(A, B, C, D), or a color-coding system (green, yellow, red) to indicate good, average, or poor health.

All health scoring methodologies need a combination of data sources to be an effective KPI. These
can include Customer Success platforms (CSPs), CRMs, help desk software, marketing automation
platforms, and your own product.

Benefits of customer health scores

Quickly assess account health.

Improve account prioritization by surfacing at-risk customers with an upcoming
renewal or business review.

Sharpen revenue forecasts.

Better predict account renewals and expansion by scoring customer behavior inside
and outside of your platform.

Identify expansion opportunities.

Find promoters by measuring advocacy indicators such as power usage, referrals,
reviews, Net Promoter Score ™ (NPS), and engagement.

Set a foundation for proactive outreach.

Segment customers based on health. Set up proactive alerts. Trigger churn
mitigation plans based on changes in scores.

Health score handbook 3

Common predictive factors of customer health
Health scores are made up of different factors (or metrics). The most accurate health scores balance
quantitative data, which typically indicates what happened, and qualitative data, which typically
indicates why it happened.

If you pay attention to only hard numbers like product usage, you’ll miss insights into a customer’s
needs and motives. If you lean too much on relationship-driven factors, like CSM sentiment, you risk
letting subjective bias influence the data. Monitoring both data types identifies conflicting behavior.
For example, a customer may have high product usage while also telling their CSM that they’re
interested in features your product doesn’t offer.

There are many different factors you can use to gauge customer health. To help frame your thinking,
we’ve divided the most common scoring factors into five main categories:

Attributes Usage Engagement ROI External risks

Customer fit Login frequency Meeting/event Customer POC departure

attendance outcomes
Product fit Time in app Company
Inbound messages Opportunities restructure
Integrations Sticky feature
usage Support history Acquisition
Implementation
readiness License/service Training progress Cancellation
utilization requests
Journey stage NPS responses

Tenure Product feedback

Customer
champion

CSM sentiment

Reviews

References

Referrals

We dig more into how to use this scoring criteria later in the guide. For now, familiarize yourself with
the different types of factors and what data you have available.

Health score handbook 4

 Factors Things to consider

Customer fit Foundational characteristics such as a customer’s industry, location,

company size, and annual revenue.

Product fit Use cases identified by the customer during the sales process and how
they envision using the product to get value.

Integrations Integrations that are essential for specific customers to get value from
your product and whether the absence of those integrations make them
more likely to churn.

Implementation A customer’s level of preparedness to implement your product. Was

readiness key data missing? Were primary stakeholders actively involved?
Implementation sets the tone for the relationship and a customer’s
capacity for success.

Journey stage How a customer’s journey progress affects their value realization.
Customers in different journey stages usually require different levels
of engagement.

Tenure How the amount of time a customer spends with your organization impacts
their product use case, usage, and goals.

Health score handbook 5

 Factors Things to consider

Login frequency Foundational characteristics such as a customer’s industry, location,

company size, and annual revenue.
Note: Just because a customer logs into your product, doesn’t necessarily mean
they are healthy. When used in isolation, logins can become a vanity metric. To
gauge adoption, track this factor alongside other usage indicators such as time in
app and feature usage.

Time in app How long a customer needs to spend in your app to see value each day,
week, or month.

Sticky feature usage What features drive consistent, long-term adoption, and how often
customers should use them. Answers may vary by use case.
Note: The consistent usage of certain features (e.g., the number of days a customer
used a feature in the last 30 days) may matter more than the sheer number of usage
events.

License utilization Whether the under-utilization of seats increases churn risk.

Note: Different license types (e.g., unlimited seats vs. restricted seats) warrant their
own health score since the model affects usage thresholds.

Service utilization Whether the under-utilization of purchased services, such as add-ons

or additional training, increases churn risk.

Health score handbook 6

 Factors Things to consider

Meeting attendance Whether customers need to attend meetings with their CSM monthly,
quarterly, or annually to receive value.

Webinar and event How a customer’s attendance at webinars and/or events impacts their
attendance adoption and advocacy.

Emails opened How often you expect customers to engage with emails from their
CSM. Think about campaigns from marketing as well.

Inbound messages How often you expect customers to initiate outreach to their CSM.

Support history How the volume, frequency, and severity level of support tickets
increase churn risk. Also, think about the duration of open tickets,
especially for high-priority items.
Note: The submittal of support tickets isn’t inherently negative behavior. A
customer’s engagement with support shows they are using the product and
invested enough to work through issues. The key is to find the sweet spot for the
number of support tickets you expect a healthy customer to submit. For example,
zero tickets could be sign of disengagement for some customer segments.

When finding your ticket baseline, you’ll want to take your engagement model
and customer tiers into account. For example, positive support interactions are
crucial for customers in digital-first models as it’s their main avenue for personal
assistance. While these customers may interact with support frequently, keep
a close watch on ticket spikes, sentiment, and resolution time. For enterprise
customers, who often qualify for a high-touch approach, the submittal of one or
two tickets may be a red flag given their regular CSM contact.

Training progress The impact of training on a customer’s ability to use your product. Is
the completion of specific learning management system (LMS) courses
or CSM-led sessions essential for achieving time to first value or long-
term adoption?

NPS responses How a customer’s NPS ranking—promoter, passive, detractor—affects

the health of the account.
Note: Surveying is important across all engagement models. It provides CSMs with
insights into the customer experience for roles, like end users, they don’t regularly
engage with.

Health score handbook 7

 Factors Things to consider

Product feedback The frequency that customers submit feature requests.

and feature requests Note: Getting product feedback from a customer is a positive health indicator.
These customers want your product to work for them, which is why they took the
time to consider sending the feedback. However, if a customer submits feedback
every few days, it could signal dissatisfaction with your solution. Like with support
tickets, you’ll want to find a sweet spot for the number of product requests you
deem appropriate for a healthy customer.

Customer champion How the presence of a customer champion affects your product’s
stickiness and priority ranking within their larger team.
Tip: Create a “contact role field” to track role types such as champion, executive
sponsor, primary contact, contract signer, or user. This would be a separate field
from a contact’s job title.

CSM sentiment Perceived and/or vocalized ROI and satisfaction for the customer.
Sentiment is one of the only ways to capture unexpected
developments in account relationships.
Note: CSM sentiment is particularly important for measuring the health of
mid-market and enterprise customers and, therefore, should be more heavily
weighted in scores for those segments. Companies typically use a high-touch
approach to manage these accounts so the CSM’s perspective is grounded in
direct interactions and a substantive, ongoing relationship with the customer.

Tip: To measure this factor, create a field to allow CSMs to check in with
feedback regarding their customer relationships. The field will need to be kept
fresh to remain useful. Consider what’s reasonable for your CSMs to update given
their number of accounts.

Also, when creating a grading scale for CSM sentiment, keep it simple. You want
to provide enough options to capture the various shades/nuances of sentiment,
but not so many choices that CSMs get bogged down trying to choose the best
fit. Using a five-point scale works well for most Customer Success teams. The
more specific you are in defining the rankings, the better.

References, referrals, How a customer’s willingness to act as a reference, give a referral, or

and reviews write a review affects their loyalty.

Health score handbook 8

 Factors Things to consider

Customer outcomes How goal achievements impact a customer’s renewal likelihood.

Tip: To measure this factor, create a field to allow CSMs to log success stories.
For a more digital approach, ask customers to self-report their success with your
product via a survey.

Opportunities A customer’s “Closed Won” expansion opportunities, such as upsells

and add-ons, over time.

Factors Things to consider

POC departure Having a customer POC leave can affect how the team operates.
Consider whether it could put your relationship at risk. Think about the
number of POCs lost over time and the recency of departure.

Company restructure Reorgs are known to bring uncertainty and stop or delay an early-
stage project or onboarding. Determine how this event could derail an
account’s momentum and success.

Acquisition An acquisition does not always point to churn, but it is likely that there
will be bumps ahead to look out for. Consider how an acquisition could
stunt adoption progress.

Cancellation requests This is a serious factor and should heavily affect your score. While it’s
hard to come back from, it can be done.
Tip: Create an interim account status for “pending churn” to signal that there may
still be time to save the account.

Health score handbook 9

Why one health score isn’t enough
A common question among Customer Success teams is: “Do we need more than one health score?”
The short answer: yes.

There’s no “one score fits all” since a customer’s expected behavior and product usage change
based on contextual factors like their lifecycle stage, segmentation/tier (grouped by industry, ARR,
company size, etc.), and subscription and product type.

To give you an example, let’s look at differences based on lifecycle stage. An onboarding customer’s
product usage and CSM engagement will largely differ from a customer who’s in the second year of
their contract. The health score for an onboarding customer will have strict usage parameters for
specific features since it’s essential to increase adoption during this time. The health score for the
second-year customer will account for an overall higher volume of product usage while excluding
events related to initial configuration and fine-tuning.

You can assign an account as many health scores as is useful.

Here are a few customer health score types to get you thinking:

Health score type Consider differences in

Product type or edition Sticky feature usage and outcomes based on product type
or edition.

Subscription type Churn risk (drops in usage/logins) based on contract terms,

e.g., free trial, freemium, monthly contract, annual contract,
in addition to unlimited seats vs. restricted seats.

Segmentation Product usage and CSM interactions for your customer

cohorts and their designated engagement models.

Tenure Feature usage, opportunities, and product feedback

based on how long a customer has been with your
organization.

Journey stage Nearly every aspect of the customer experience based

on the journey stage, e.g., implementation, onboarding,
and adoption (year one vs. year two).

Health score handbook 10

Seven steps for building a customer health score

Now that you have a feel for what factors comprise a health score and the different types of health
score models you can use, let’s walk through the process of how to build one.

1. Identify customer segments

Segmentation is the foundation of effective Customer Success. Dividing your base of customers by
characteristics and needs enables you to provide more tailored programs and services.

Every health score must have at least one defined segment. To determine it, think about what you’re
looking to measure and which group of customers that measurement affects.

Below you’ll find common segmentation approaches based on organizational maturity. At ChurnZero,
for example, our customer segmentation and CSM book assignment are divided by employee count.

Growth Scale Optimize

1 2 3

Product edition Employee count Industry vertical

Contract value Servicing needs

If you suspect your business has outgrown its customer segmentation strategy, it might be time for a
book shift. Watch this webinar to learn how ChurnZero overhauled its entire segmentation approach
and CSM assignment methodology with our step-by-step launch plan.

Health score handbook 11

2. Determine what a healthy customer versus an unhealthy customer looks like

Next, you’ll need to define what customer health means to your organization. There isn’t a definitive
set of criteria for establishing customer health. It will be unique to your business and to each of your
customer segments.

To start, choose a customer segment to evaluate. Make a list of shared behaviors among customers
in this segment who you consider to be healthy. Next, make a list of shared behaviors among
customers in this segment who you consider to be at risk or those who have churned.

If you’re unsure what indicators lead to customer retention or churn, start with a theory. For example,
let’s say you believe that customers need to have used three specific features by X date to renew.
Compare that hypothesis against your most successful customers’ feature usage over the last six
months. Does it match up? Now, compare that hypothesis against your churned customers’ feature
usage over the same period. Does it still hold true?

By conducting use case studies to validate or disprove your assumptions, you start to develop a more
acute awareness of behavioral patterns.

Get predictable with leading indicators

Customer Success teams tend to overfocus
on lagging indicators, such as customer
satisfaction metrics, which can lead to
unexpected churn when a customer’s health
isn’t as strong as expected. You can improve
your forecasting accuracy by identifying how
your team affects lagging indicators and
factoring those actions into your scores.
• What actions does my team take to increase
implementation satisfaction scores?
• What actions does my team take to increase product
engagement? Does a lack of product engagement
correlate to an increase in churn?
• Does a QBR identify user feedback that drives
end-user engagement and renewal?

To assess your team’s influence, ask yourself
these questions, courtesy of Matthew Brown,
vice president of customer success & service
at Solink.
• Does the increased use of features increase speed
to secondary revenue?
• Does additional training lead to more sophisticated
feature use?

Health score handbook 12

3. Pick your scoring criteria

Now that you’ve set some baselines for healthy and at-risk customer behavior, it’s time to decide what
metrics you’ll use to measure that activity.

Brainstorm a list of all the potential metrics. Consult the factors outlined in the “Common predictive
factors of customer health” section. Then, cut your list down to the top six to 10 metrics that give you
the most accurate assessment of customer health based on your chosen segment and health score
type. Using fewer than six metrics limits your view of health and using more than 10 metrics makes it
hard to pinpoint the causes behind score changes.

When choosing metrics, there are a few important rules to follow:

1. Avoid metrics outside of your control.

Include only factors that you can 1) tie back to customer performance or value,
and 2) influence and act on.

2. Choose the metrics most relevant to your business, product, and customers.
This point is worth reiterating. There is no universal recipe for building the perfect
health score. Instead of chasing an ideal, use a balanced mix of factors that best fit
your company’s specific conditions.

3. Consult your team.

They’re on the frontline with customers every day and should have strong opinions
about which factors are the most and least impactful. If gathering input starts to
become design-by-committee, limit those involved to a few individuals.

Health score handbook 13

4. Create a grading scale

A grading scale is a system used to assign a number, color, or letter grade to a score. It’s usually
percentage-based with a certain percentage of the total score representing each grade.

For demonstration purposes, we’ll follow the grading scale of ChurnZero’s health scores, which we
call ChurnScores. This system uses a scale from 0 to 100, with 0 signifying a low churn risk and 100
indicating a high likelihood of churn. The scale is divided into thirds (by default): 0 to 33 is green (low
churn risk), 34 to 67 is yellow (medium churn risk), and 68 to 100 is red (high churn risk). If you want to
simplify, you could also use a five- or 10-point scale.

Grading scale

33 67

Low risk of churn High risk of churn

You can alter grade thresholds for different health score types. For instance, in your onboarding
score, you may decide to tighten the parameters for a customer to achieve a green score so that even
slight drops in their metrics qualify as risky behavior, thereby alerting the CSM and putting churn
mitigation plans in motion.

Health score handbook 14

3. Weigh each factor based on its importance to churn factor’s point total

All health factors are not created equal. Depending on your segment, some factors may have a larger
or smaller impact on a customer’s likelihood to churn or expand. Weigh each factor to determine its
impact percentage and assign points equal to that percentage. The sum of total points across all
factors cannot exceed 100.

Assign each factor enough weight that if it significantly fluctuates, it will impact the score. For
example, if you’re using a 100-point scale, aim to give each factor at least 10 points and no more than
20 points.

However, there are exceptions when grouping similar factors. Let’s say you want to base 20% of your
score on product usage. You could spread the points for that factor across three separate metrics
(e.g., one metric per usage event) that add up to 20 points.

Attributes Usage Engagement ROI External risks

Customer fit Login frequency Meeting/event Customer POC departure

attendance outcomes
Product fit Time in app Company
Inbound messages Opportunities restructure
Integrations Sticky feature
usage Support history Acquisition
Implementation
readiness License/service Training progress Cancellation
utilization requests
Journey stage NPS responses

Tenure Product feedback

Customer
champion

CSM sentiment

Reviews

References

Referrals

Customer health score factors

Health score handbook 15

Here are two examples of health scores to show how you might weigh points.

Onboarding health score example

Factors that contribute to churn Ideal threshold Weight

License utilization >90% utilization 10%

Journey stage: onboarding Status: on track 15%

Product usage 20%

• Login frequency Logins: daily [5%]

• Basic usage Basic usage: >3x week [5%]

• Sticky feature usage Sticky feature usage: >1x week [10%]

Relationship and engagement depth Responsive with weekly engagement 20%

Main POC left the company POC is still with the company 20%

NPS survey response Promoter score 15%

Total 100%

Aggregate health score example

Factors that contribute to churn Ideal threshold Weight

License utilization <40% decrease in utilization 15%

Product feature usage 20%

• Logins Logins: >10 in last 30 days [10%]
• Time in app Time in app: >120 minutes in last 7 days [10%]

NPS survey response Promoter score 15%

CSM sentiment Green score 20%

Support tickets <2 support tickets open 15%

Customer outcomes >2 success stories logged 15%

Total 100%

Health score handbook 16

6. Determine point allocation

Health is a spectrum. Avoid scoring factors as all or nothing. Instead, award factor points based on
steps a customer takes from most to least risky. This will vary for each factor.

When assigning, you want to give points for positive behavior. For example, let’s say your product is
a content management system, and your customer needs to publish at least 10 blogs each month to
be considered healthy. If a customer meets the criteria of publishing 10 or more blogs over the last
30 days, they get 100% of the points. If they only publish five blogs, they get 25% of the points. If they
publish zero blogs, they get zero points.

Range Range % of points Points

(bottom) (top) for this factor allocated

O blogs 0 blogs 0 0

1 blog 5 blogs 25 12

6 blogs 9 blogs 75 38

10 blogs 100 50

Tip: If you’re unsure whether a range you are using accurately reflects a customer’s usage, we
recommend stack ranking your customers by usage and looking at the average usage of the
top, middle, and bottom 50 accounts.

Health score handbook 17

7. Make health scores actionable

Automating the scoring process reduces the time and effort needed to maintain accurate and
trusted scores, freeing up Customer Success resources to focus on strategic work. Using a Customer
Success platform (CSP) like ChurnZero, you can automate score calculation and feed real-time
customer data (like product usage, support interactions, survey results, and journey progress)
directly into scores to give you an up-to-the-minute snapshot of customer health.

With automation, you can:

• Pair scores with alerts and playbooks to instantly notify CSMs of changes in scores and
trigger mitigation action plans or upsell campaigns.

• Prioritize outreach to your most at-risk accounts approaching renewal by creating a “hot
list” segment based on red scores, upcoming renewal date, total contract amount, and ARR.

• Spot trends by viewing health score changes over time for accounts in a visual dashboard.

ChurnZero’s ChurnScores account details page

Health score handbook 18

Tips for launching a customer health scoring program
Customer health scores take a bit of practice to get right. However, once you have the basics
down, you’ll possess a powerful advantage over churn and a near sixth sense for spotting expansion
opportunities.

Having helped hundreds of Customer Success teams launch their first customer health score, our
team has picked up a few valuable lessons about what makes an effective score. Here are their top
tips when starting out.

Don’t strive for perfection

The first time you create your health score, it’s highly unlikely that you nail it—and that’s to be
expected. The goal is to build a sensible baseline to launch your program. Use feedback and objective
data to make your health scores more accurate over time.

Know your data is not perfect

You’re bound to encounter anomalies and errors (false positives and false negatives) in your scoring
model, which you’ll need to recalibrate and correct.

Treat your health score as a living, breathing target

Even if you were to get your initial score exactly right, it’s not a permanent measure. Your product,
processes, and customers evolve over time. Evaluating your scores is essential to maintaining their
accuracy.

We recommend conducting a review-and-edit session at least once per month for the first several
months after you launch a new score. After that, review the score once per quarter to ensure it aligns
with your product and processes. Use this five-step guide to audit the effectiveness of your health
scores in predicting customer retention and churn.

Health score handbook 19

Train your team on the why and how of using health scores
If you want CSMs to trust the scores, be transparent about what goes into them. Provide a breakdown
of each score’s metrics and weights. Review scores during internal one-on-ones or escalations to
assess their impact and accuracy.

Tie incentives to scores

Test using health scores in variable compensation targets to get teams focused on their goals. For
example, if you want your team to focus on improving onboarding, set a goal for them to increase their
accounts’ onboarding health scores by a percentage.

Visualize the financial value of customer satisfaction

Use health scores to help your leadership team and investors recognize the relationship between
customer health and revenue. Create a visual chart showing the revenue and logo retention associated
with each of your health score grades (green, yellow, red) across customer segments. Learn how
to build this exact chart in our article, “How Customer Success can use metrics to better engage
investors and boards.”

Health score handbook 20

Take control of your company’s customer health with
ChurnZero
As a Customer Success leader, you never want to be in a position where you don’t know the churn
risk or expansion potential of your customer base. Building a customer health scoring program helps
alleviate the fear of surprise churn and missed opportunities so you can take a more proactive and
productive approach to driving retention and growth.

With ChurnZero’s ChurnScores, you get a deeper understanding of your customer’s health and have the
behavioral insights you need to engage your customers when they need it most.

To find out how you can use ChurnZero to automate your health scoring program and drive more
predictable revenue, schedule a demo today.

ChurnZero’s ChurnScores account dashboard

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