Customer Health Score: Definition, Examples, and Best Practices

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1. What is a Customer Health Score?

A Customer Health Score is a metric that reflects how likely a customer is to stay, expand, or churn. It's typically based on product usage, support interactions, billing behavior, and other key indicators of engagement or risk. The score helps Customer Success and Revenue teams prioritize their actions and understand account trends in real-time.

2. Why It’s Important

Why should SaaS businesses care about health scores?

Health scores act like an early warning system. They let you spot disengaged customers, identify upsell opportunities, and ensure your CS team isn’t flying blind. Without it, you're left reacting to churn after it happens.

How is a health score calculated?

There’s no universal formula, but here’s a basic model:

  • Product usage – Frequency and breadth of feature usage
  • Support signals – Tickets created, resolution time, sentiment
  • Billing behavior – Failed payments, downgrades, time since last renewal
  • Engagement – Email opens, meeting attendance, response rates

Each input can be assigned a weight and transformed into a score (e.g., from 0–100 or green/yellow/red).

What does a good health score look like?

- High score = happy, active, and growing customer
- Medium score = passive usage or mild risk
- Low score = churn risk or disengaged

Should health scores be static?

Not at all. Static scores quickly become outdated. That’s why leading SaaS teams implement automated, dynamic scoring models that adjust daily based on live behavior. Tools like Customerscore.io calculate these scores continuously and trigger alerts.

Health scores vs. churn prediction

A health score is a heuristic model based on expert rules. Churn prediction is a machine learning model that uncovers hidden correlations from historical data. They’re complementary — use health scores to guide playbooks, and ML to find non-obvious risks.

Use case: How PLG companies use health scores

Product-led growth companies rely heavily on health scores to:

  • Prioritize customer outreach by CSMs
  • Trigger in-app messaging based on score drops
  • Drive automated playbooks for re-engagement

Read our full guide on how to build your own health scoring system here.

FAQ

How do I choose what goes into my health score?

Start with the behaviors that correlate with renewals or upsells in your data. Mix quantitative usage with qualitative inputs (e.g., survey results or NPS).

Should I have different health scores for different segments?

Yes. A high-usage signal in one segment (e.g., enterprise) might look different from a signal in SMB or freemium accounts.

Can I use a CRM for health scoring?

You can, but it’s often clunky. A dedicated CS platform like Customerscore.io gives more flexibility, automation, and accuracy.

How often should health scores update?

Ideally daily — especially if your product is high-frequency. Manual updates or monthly recalculations are too slow to catch early churn signals.

What if I don’t have usage data?

You can still build a basic model using engagement, survey responses, or support signals. As your data improves, evolve your model.