There are many tools and technologies available to help you measure short-term customer health — NPS, CSAT, and CES, to name a few. All of these can tell you a lot about how customers feel in the moment.
But what about long-term customer health? How do you know if a customer is going to stick with your company in the years to come?
To measure long-term customer health, you need to look at the big picture. You need to consider how much value a customer is getting from your product, how often they’re using it, and whether or not they’re likely to renew their subscription.
In this post, we’ll discuss how to measure long-term customer health and how to use that information to reduce churn.
1. Net Promoter Score (NPS)
Net Promoter Score (NPS) is a customer loyalty metric that gauges how likely a customer is to recommend your business to a friend or colleague. It’s calculated by asking customers to rate, on a scale of 0-10, how likely they are to recommend your business.
Customers who give a score of 0-6 are considered detractors, 7-8 are considered passives, and 9-10 are considered promoters. Your NPS is calculated by subtracting the percentage of detractors from the percentage of promoters.
NPS is a great way to measure long-term customer health because it gives you a good sense of how happy your customers are with your business. It also helps you identify which customers are at risk of churning so you can take steps to prevent it.
2. Customer Satisfaction Score (CSAT)
Customer Satisfaction Score (CSAT) is a metric that measures how satisfied a customer is with your product or service. You can use CSAT to measure customer health by sending out surveys at different points in the customer lifecycle.
CSAT is a great way to measure short-term customer health because it gives you a snapshot of how happy your customers are at any given time. You can also use CSAT to identify trends in customer satisfaction and make improvements to your product or service.
3. Customer Effort Score (CES)
Customer Effort Score (CES) measures how much effort a customer has to put in to get an issue resolved or a question answered. Customers who have to put in a lot of effort are not likely to be happy with the experience.
By measuring customer effort, you can get a sense of how easy — or difficult — it is for customers to do business with you. And when you make it easy for customers to do business with you, you’re more likely to have a long-term relationship with them.
4. Customer Health Score
Customer health scores are a great way to measure the overall health of your customers in a single number. These scores are based on a variety of factors and metrics, and are used to determine how likely a customer is to renew or churn.
The customer health score is a great way to track how your customers are doing over time. If the score is going up, it’s a good sign that your customers are happy and healthy. If the score is going down, it’s a sign that you need to take action to improve the customer’s experience.
You can also use customer health scores to segment your customers and identify which ones are at risk of churning. This can help you prioritize your efforts and focus on the customers who need the most help.
5. Customer Lifetime Value (CLV)
Customer Lifetime Value (CLV) is a metric that shows how much money a customer is likely to spend on your products or services during the course of their lifetime.
To calculate CLV, you can use the following formula:
CLV = (Average purchase value) x (Number of times the customer will buy from you in a year) x (Average length of the customer relationship in years)
For example, let’s say that the average purchase value for your customers is $100, the average number of times they buy from you in a year is 5, and the average length of the customer relationship is 5 years. In this case, the CLV would be:
$100 x 5 x 5 = $2,500
CLV is an important metric to track because it can help you determine how much you should be willing to spend on acquiring new customers. In general, the higher the CLV, the more you can afford to spend on customer acquisition.
6. Customer Retention Rate (CRR)
The Customer Retention Rate (CRR) measures the percentage of customers you’ve successfully retained over a specific period. This is a great way to gauge how well you’re doing when it comes to keeping your customers happy.
You can calculate your CRR by using the following formula:
(Number of customers at end of period – Number of customers acquired during period) / Number of customers at start of period x 100 = CRR
For example, if you had 100 customers at the beginning of the year and acquired 20 new customers during the year, but only had 90 customers at the end of the year, your CRR would be 70%.
7. Expansion Revenue
Expansion revenue is the revenue generated from existing customers who have purchased more or additional products and services. This is a great way to measure customer health because it shows how much your customers trust you.
If you have a high level of expansion revenue, it’s likely that your customers are very satisfied with your products and services. If you have a low level of expansion revenue, it may be a sign that your customers are not satisfied and are looking to other companies for their needs.
8. Customer Advocacy
Advocacy is the highest form of customer loyalty. When customers become advocates, they don’t just stick around — they also spread the word about your brand and products to others. This can lead to new customers, more revenue, and a healthy cycle of growth.
To measure customer advocacy, you can use a metric like your Net Promoter Score (NPS). This is a measure of how likely your customers are to recommend your business to a friend or colleague. You can also track how often customers actively recommend your product through referral programs. Tools like ReferralCandy help make advocacy measurable by showing which customers refer others, how often they do it, and what impact those referrals have over time.
Advocacy is a great way to measure long-term customer health because it’s a leading indicator of growth. If your customers are advocating for your business, it’s a good sign that they’re healthy and happy.
9. Voice of Customer (VOC)
VOC is a type of feedback that comes directly from your customers. This feedback can be collected through surveys, interviews, or even social media.
The idea is to ask your customers questions about their experience with your company and then use their responses to drive decisions about how to improve.
VOC is a great way to measure long-term customer health because it gives you a direct line to your customers. This means you can get a sense of how they’re feeling about your company at any given time.
Conclusion
Customer health is a multi-dimensional concept that involves various aspects of customer success, happiness, and loyalty. You can’t understand customer health by measuring one or two factors alone. Instead, use the customer health metrics we discussed above to take a holistic view of each customer’s relationship with your business.
