Guest Column | December 6, 2019

How To Develop A Customer Health Score

By Ciaren Diante, Capsule

Celebrate Health IT Week

Determining the health of a particular customer’s account is easy when you are first starting out as a business. With a small customer base you have the opportunity to work closely with each individual customer. This allows you to better understand how they are feeling about your product or service. But as your business grows, so does your customer base. When you have more customers, it becomes nearly impossible to manage each relationship on a personal level. This is why a customer health score is crucial for a growing SMB.

So what is a customer health score? It is a way to measure and classify the likelihood of a customer leaving or becoming a high-value advocate. It is a key metric to alert you when you might need to pay attention to an unhappy customer. It also provides insight into the characteristics of a high-value customer. There’s no industry standard to follow, a customer health score is unique to each individual business. However, there are some key areas to consider when building a customer health score.

Defining Traits

Creating a health score starts by understanding what a successful and unsuccessful customer looks like for your business. A customer is successful if they are deriving value from your product or service. Obviously, an unsuccessful customer is not seeing the value, and usually, are labeled as “at risk.” You need to determine the characteristics of a customer in both of these categories. When you analyze your most successful clients versus ones that have left, you’ll begin to notice different traits amongst the groups. Start a small list of these traits. You want to keep it simple so you don’t overwhelm yourself with data.

Defining Metrics

Once you’ve built your list of characteristics, you can start to define the key metrics for your health score. Take a SaaS company as an example. A successful customer for them might be one that logs in regularly, utilizes key features, takes advantage of integrations and invites new users regularly. Now you can take these and turn them into metrics for your health score. This is not a perfect science by any means. It will require several tweaks throughout the process. But the closer you look at customers and products, the more likely you are to create an accurate model.

Example Metrics

You can track your scores in several different ways. Whether that be one score for each customer or segmenting audience based on business size or the stage they are at in the customer life cycle. No matter the structure of your health score, there are some common metrics any business should consider. Here are four major areas to measure.

  1. Frequency. How often does a customer buy your goods or visit your store? For a SaaS business, you might look at how frequently they log in to your platform. With this metric, be careful not to read too much into it. If a customer isn’t logging in every day, they aren’t necessarily ‘at risk’. Perhaps they are on vacation or only need the software at specific points in the year. Likewise, if someone is logging in every day, that doesn’t automatically mean they are a healthy customer. Product use is important, but you need to add context around the behavior before drawing conclusions.
  2. How much do customers need you? Look for behaviors that indicate your product or service is integral to your customer’s life. The more invested a customer is in your business, the more difficult it will be for them to leave. For example, if a customer integrates several of their tools into your platform, they would have to go through the process of disconnecting their tools and exporting data before leaving your service.
  3. Customer satisfaction. A customer may score well on several metrics, but that does not automatically equate to a healthy customer. It is important to know if they are satisfied and happy. There are tangible ways to measure this depending on your industry. For example, you might be able to utilize the Net Promoter Score (NPS). Different industries have tools to measure customer satisfaction. Find the one for your business and track how you are doing.
  4. Relationship. Establishing a great relationship with the point of contact is crucial for any business. Once it is established, you can learn a lot through your regular conversations that metrics may not pick up on. You can flag potential issues on an account based on your interactions. Be sure this knowledge is considered in your health scoring. For example, if you hear big changes are coming to leadership, there is risk associated with those changes. On the other hand, if the metrics do not look good but you know the customer is in the midst of moving into a new office, you might not need to be as concerned. Let common sense prevail when monitoring a health score.

What Else to Consider

With so many metrics to consider, things can easily be forgotten. Here are some additional points to consider with a health score.


If a change is made related to the customer’s payment, you might want to take a look. For example, if they ask for a more detailed invoice or change the date of payment - it could warrant some investigation into why they are making changes.

Marketing Engagement

It is a good sign when a customer interacts with your marketing efforts. Whether that be participating in competitions, attending your events or reading your newsletter. This is an easy way to see that they are happy.


This can be an ambiguous metric. For some businesses, it is a good sign to see regular repeat purchases. For others, like tech, it might be a concern as it signals inertia, making them an attractive target for competitors.

Calculating the Score

Once you determine what healthy and unhealthy means for your customer base, you can begin to see which metrics carry more weight for your business. Your calculation should be tailored to your products and customers. Generally an overall score is given as a percentage and classified by color. For example:

  • Red: 0 to 35 percent. This is an “at risk” customer.
  • Yellow: 65 to 70 percent. This is a client that is doing okay.
  • Green: 70 to 100 percent. This indicates a healthy customer.

The calculations you use to determine the percentages can be as simple or complex as you make them. You can either develop a formula internally or invest in a tool to do it for you. Look at utilizing your existing tools as well. Pull your health score into your Customer Relationship Management (CRM) platform. This will provide you with a holistic view of your customer to give you the context you need.

Remember, a customer in the red is not necessarily about to leave nor is everything perfect with a customer in the green. The colors are meant to alert you to dig a bit deeper. Always be sure your calculations include human input. A health score is always a work in progress. Be prepared to change and update it along the way.

About The Author

Ciaren Diante is Head of Customer Success at Capsule. Ciaren has more than 20 years of experience helping businesses to grow rapidly, along with a desire to transform the business world through the intelligent use of technology. A trusted advisor, who has an in-depth knowledge of the entire customer life cycle, and an ability to build teams within customer-centric technology companies.

About Capsule

Capsule is a Customer Relationship Management (CRM) SaaS platform that helps businesses stay organized, know more about their customers, build strong relationships and make the most of sales opportunities, all while minimizing user input. The product supports small to large scale organizations and is easily scalable as businesses grow. Launched in 2009 in Manchester, United Kingdom, Capsule is already used by more than 15,000 customers across the globe. To learn more about Capsule, visit