How to Calculate Customer Health Score?

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Struggling to gauge the health of your customers? You aren’t alone. Here’s a foolproof guide to determining your customer health score. This will help your business grow and you can prioritize key activities to boost revenue. Get ready to maximize your potential!

Measuring customer health is both important and simple. In this article, we’ll give an overview of customer health score calculation, examine the parts of a customer health score, and explain why it’s beneficial to calculate it.

Customer health score (CHS) measures how committed customers are to your business. It looks at metrics like product usage, user journeys, and recent purchases. A high CHS means customers are likely to remain loyal, while a low CHS suggests the risk of them switching providers. Calculating CHS correctly helps businesses recognize issues before they become major problems, and shows what customers need more support with.

A CHS looks at various factors related to one customer’s relationship with the company. It takes into account things like usage frequency, user journeys, and account payments. All this data is analyzed to create a CHS that’s determined by weighted data points. This helps companies evaluate customers’ loyalty over time.

What is a Customer Health Score?

Customer Health Score (CHS), also known as Customer Lifetime Value Score (CLV), is a metric to measure the success of customer relationships and track progress over time. It ranges from 0 to 100 and gives a quick idea of how the relationship with customers is doing. The better the score, the better the relationship.

CHS helps businesses learn about customer health. It uses customer engagement, spending level, purchase frequency, digital engagement, loyalty rewards redemption amount, customer service interaction frequency, and more. Calculating CHS lets organizations find out trends that can help in making decisions. This lets them track business performance and customer retention over time.

Benefits of Calculating Customer Health Score

Calculating customer health score (CHS) is a must for sales, customer success, and customer support teams. It helps them understand customer engagement and utilization better. Using this metric helps businesses increase customer lifetime value (LTV). LTV is the amount of revenue generated from a single customer over their lifetime with the business.

CHS gives teams insight into how customers interact with the product or service. It also helps to spot areas where customers may need assistance. With this data, teams can make informed decisions on product/service improvements, and even provide targeted assistance.

Moreover, CHS helps segment and prioritize outreach strategies. Advanced analysis of past behaviors and results enables teams to personalize outreach tactics. This drives further adoption and usage by users through increased engagement. This leads to more effective onboarding strategies, improving longevity in user relationships and high ROI.

Steps to Calculate Customer Health Score

Calculating a customer health score is vital for businesses to understand and manage their connections with customers. This score helps monitor customer performance over time, spot chances for improvement, and increase profits. Knowing how to work out the score is a must for any biz that wants to build relationships that are both profitable and sustainable. Here are the steps for it:

  1. Find out goals – Define what the result from the calculations should be – increased revenue, better customer satisfaction, or both.
  2. Figure out the data points – Get data on criteria such as sales, brand affinity, usage frequency, and NPS. This data will help work out the score.
  3. Compute environmental impact – Think of external economic conditions, geopolitical context, and other disruptive events that could influence aspects of customer performance in the marketplace.
  4. Analyze trends – Use analytics software to find trends in customers and adjust overall strategy based on this insight to optimize revenue or improve service.
  5. Make scores – Standardize evaluation criteria by creating normalized scores for each metric used for the score so that all values can be compared.
  6. Compare scores – Compare current performance levels with past ones or expected ones from long-term strategies to get a better comprehension of how strategies are doing before making changes.
  7. Track performance – Monitor changes over time using the same metrics used for the initial scores to track improvements or declines more accurately and keep records of performances associated with specific initiatives.

Tools and Resources for Calculating Customer Health Score

Grasping and computing customer health scores is key for successful customer-keeping strategies. To help businesses calculate their customer health score, there are many tools and resources out there. From online cost-effective options to more thorough software solutions.

Online tools: Platforms such as RFPIO, ChartMogul, and Inturact have a variety of features that assist in calculating customer health scores. Some are more limited and just provide general assessment tools or basic reports, while others have complex platforms that offer specific customer profiles and product utilization analysis.

Software Solutions: Businesses that require more comprehensive analytics can opt for specialized software solutions such as Totango or Gainsight. These solutions provide advanced algorithms that assess customer usage data along with machine learning capabilities to monitor segmentation trends and engagement analytics over time.

Other Resources: Companies can also use third-party services during their evaluation processes or to complement existing assessment platforms. For example, companies may recruit consultants with extensive knowledge of customers’ buying habits or hire marketing intelligence firms that specialize in collecting real-time feedback from the marketplace.

Key Metrics to Consider When Calculating Customer Health Score

Evaluating customer health requires several metrics to calculate the customer health score. It is a metric to measure if a customer will remain engaged with the product/service. It is based on customer behavior and can show signs of churn or offer opportunities to engage customers at risk of churning.

Data to calculate the customer health score:

  • Product usage: Check how often customers access the product, how many new features they’ve tried, and their check-in frequency. Usage intensity, engagement channels, and repeat purchases can also be incorporated.
  • Loyalty: Measure activity over the customer’s lifetime. Include active days, months since last seen, and frequency of purchases.
  • Customer impact: Interactions such as tags, messages, and ratings/reviews of other users’ products/services.
  • Activity level forecasting: Past user activity predicts future behavior. Forecasting models capture behavioral patterns and build a retention model to rank users.

Best Practices for Calculating Customer Health Score

Customer health scores track changes in engagement, loyalty, and satisfaction. They can help businesses spot customers at risk of churning, spot trends across channels, and segment customers for targeted marketing.

Four steps to calculate a customer health score:

  1. Gather data from touchpoints like social media, website visits, and other customer interactions.
  2. Establish core metrics to measure outcomes, like conversion rate or cost per lead. Consider factors like demographics and purchase history.
  3. Convert values to a 0-10 scale for scoring purposes.
  4. Use logistic regression to calculate an individual’s overall customer health score.

Analyze the results proactively to identify areas where customer engagement has dropped. Monitor customer health scores to gain insight into how to better serve the audience and remain competitive.


A customer health score is essential to evaluate customer relationships. We need to consider three main factors: commitment level, purchasing volume/velocity, and purchase behavior trends. Analyzing this data gives an objective understanding of the relationship and potential ways to improve.

When calculating the score, organizations should weigh each part and use their approach. Don’t put too much emphasis on any one factor, as this can give the wrong results.

Finally, computing a customer health score is about understanding customers: their actions and preferences. Using this method regularly can help businesses keep customers loyal, interested, and profitable.

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Sayan Dutta
Sayan Dutta

Hi, my name is Sayan Dutta and I’m the creator of the ReadUs24x7. I am an Electronics and Telecommunication Engineering by qualification & digital marketer by profession. I am a passionate digital marketer, blogger, and engineer. I have knowledge & experience in search engine optimization, digital analytics, google algorithms, and many other things. I have knowledge in WordPress Website Development as well as image designing.

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