This article is based on a presentation given by Patti at the Customer Success Festival in Las Vegas, in May 2023.

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My name is Patti Zack, and I was recently the Chief Customer Officer at FiscalNote. My entire professional journey has been in the realms of information and financial services, primarily at large-scale companies.

This article will cover several areas:

  • An introduction to customer health
  • An outline of prevalent industry issues
  • The methods we used to develop customer health scores, and
  • How FiscalNote integrated these into its teams' workflows.

Customer health: Enhancing organizational value and navigating challenges

So why do we regard customer health as a critical factor in enhancing organizational value? I’d like to share two quotes from a McKinsey article.

The first quote states:

"Compensating for the value of one lost customer can require the acquisition of three new customers."

This statement resonates with key decision-makers like CFOs. They understand the economic implications and the fact that it takes acquiring multiple new customers just to offset the loss of one.

The second quote is:

"80% of the value creation achieved by the world's most successful growth companies comes from their core business."

This significant value creation is mainly due to the unlocking of new revenue streams from existing customers. This realization should serve as an aligned North Star for your product, engineering, sales, and customer success leaders.

If there's one common goal to rally around, it should be driving 80% of your organization's value from your core business.

The problem when it comes to customer health

So, what’s the problem? The challenge arises in an environment with constrained resources, overwhelming data, and escalating pressure to meet objectives. Customer success leaders face the task of unifying efforts and prioritizing the most impactful areas. We often hear phrases like "work smarter, not harder" or "optimize your resources."

The first problem is identifying the customers in the most trouble – the ones emitting the “smoke signals.” Since it costs significantly more to acquire new customers than to retain existing ones, spotting these signals is crucial.

Secondly, if 80% of your organizational value stems from your existing customer base, the question becomes, “How do you cultivate and capitalize on this? How do you navigate the path to unlocking that value?”

Re-examining the customer journey to enhance customer’s experience
We spoke to Ralph Meyer, Enterprise Customer Success Manager at Procore Technologies, ahead of his presentation at the Customer Success Festival in London. Ralph asks the question: ‘How do we shift from a product-focused discussion to solving business challenges?’

Experience-led decline: Misaligned understanding of customer health

In my first few weeks as the Chief Customer Officer of FiscalNote, I decided to pose an essential question to my fellow leaders, each skilled in their respective areas:

"How do we identify healthy and unhealthy customers?"

I received a range of responses:

  • Chief Marketing Officer: "It's all about engagement with our content. If they attend a webinar or interact with our content, we consider them healthy."
  • Sales and Account Managers: "It's based on the strength of our relationship with the customer."
  • Product team: “It’s based on product usage and the adoption of key features.”
  • Success and support team: “It’s the customers' ability to articulate the value they received by the end of the contract or their CSAT score.”
  • Finance: “It’s the contract value and prompt payment.”

After considering all these responses, I realized they were all correct (in their ways). However, this led to a significant issue.

Each of these functional teams had different perceptions of what constitutes a healthy customer and accordingly directed their resources towards initiatives they believed would create organizational value.

Unfortunately, this mismatch in understanding resulted in confusing customer journeys, misaligned efforts, inaccurate forecasts, wasted resources, and, worst of all, employee burnout due to unclear focus areas. Leaders were constantly shifting focus, causing what I call an "experience-led decline."

In this scenario, various customer-facing teams impact the customer in different ways, resulting in a suboptimal customer experience. It's not a product-led decline, or a customer-led decline, but an experience-led decline.

Unlock growth potential with the customer health score
Are you ready to future-proof your customer success efforts with effective customer health scoring? In this article, I’ll explore the transformative power of health scoring in driving customer success and business growth.