Over the past year, the biggest theme we’ve observed at Quala is the increasing responsibility of customer success teams to show revenue impact. As businesses navigate a historic time of change, it’s up to CS reps and leaders to troubleshoot issues, problem-solve solutions, and ensure high-touch experiences.
“Customer success is no longer just a management term bandied around in meetings, it is increasingly being recognized by organizations globally as a way to assist clients to achieve desired business outcomes and manage post-buy relationships,” writes a recent report for KPMG Australia.
“Customer success drives growth through single-minded focus on the customer.”
How can teams build a through-line from their everyday activities to revenue performance? This was the question that inspired our most recent Quala Community Hour discussion topic: health scores.
Framing the Discussion
Behind the scenes, Quala runs a community of hundreds of customer success leaders, at fast-growing companies around the world (join us if you haven’t already). At least once a quarter, we sync for an actionable discussion (check out our previous sessions here).
On June 15, we got together to talk about health scores — a topic that we’ve found to be controversial in our circles. Some companies have found a lot of success tying health scores to revenue. Others perceive this metric to miss the mark on capturing their goals.
So how do you make your health score worth your time?
We sat down with Michael Marcus, co-founder and VP of customer success at Jebbit, an insights platform that works with customers like the NFL, Shiseido, bareMinerals, and more to answer this question.
We began the conversation with a 30-minute Q&A led by co-founder Sonciary Honnoll. Here were some key points that the two of them hit in their Q&A focused on the why, when and hows of health scores:
Your Health Score is a Teammate
Instead of thinking of your health score as a magic bullet, think about it like a teammate – a valuable tool to spur conversations, communicate risk and drive the right behaviors.
Michael: I think the first place that I stumbled in the early days before we created our health score was I thought a health score needed to be that single source of truth. It had to be right or wrong, period.
And I think the really important learning as we went through the whole process that’ll bring back to anyone who’s creating a health score from scratch is that the health score is like a teammate. It’s not the end point. It’s not the thing that just decides this will churn, or this will renew. It’s the piece that if you operationalize it correctly can be really helpful. It’s not going to be right every single time. And it certainly isn’t for us, but it helps spur conversation that creates great behaviors amongst the team.
Why You Need a Health Score
It’s the shortest path to ensuring that you’re focusing on the right initiatives as you scale your Customer Success organization.
Michael: I think just as you’re laying a foundation, first thing about why do you need this health score, and for us, the reason was very simply, we were putting our time in potentially the wrong places with our customer base. Our customer base grew, we had a team that was growing and we talked all the time about prioritization, where should I put my time?
So actually, the core of it really didn’t stem from predicting churn per se. It evolved to that. But it was how do you focus the team on the highest impact areas? First, how can we proactively flag customers who might be at risk? How can we proactively flag customers where there’s opportunity and let’s use an unemotional number and pair it around qualitative internal sixth sense so to speak.
For us, we really wanted to focus on creating more value for our customers, spending time in the right place, more accurately predicting renewals. And I think if we had that dashboard, ultimately we’re going to improve retention. If the team is better set up to scale, to focus in the right areas, to spend their time in the right places, our retention should go up as a result.
It’s Never Too Early to Start
Earlier the better – start building a health score when you know your customers best.
Michael: Earlier, the better. Right away from the start if I could do it over again, I’d go right from the start. And I think the reason for that, it’s like the same question when someone’s like, “When should I use Salesforce?” You might not need it from the start. I can use my spreadsheets. But if I build the infrastructure when it’s most simple, and when I understand the customer best, you’re going to have a better foundation for a health score.
How to Pick the Right Indicators
Many of us struggle with leading vs lagging indicators and figuring out which are the right metrics to include. Michael shares some tips on how to identify them:
Michael: The way we started out was we just went to a whiteboard. We didn’t over-complicate it, it was nothing fancy. We put up a whiteboard, locked ourselves in a room. It was myself, another member of the customer success team, our data analyst and our VP of product. And the four of us were in there for three or four hours. And all we talked about were, here are customers who renew, why? Here are customers who churned, why?
We looked at the data from the last year in those renewed and churned customers. What are some things that stand out that might’ve led to the renewal, that might’ve led to the churn? And we just wrote every category down. And I think at its peak, we had 100 potential factors ranging from incredibly specific to just broad.
We brought it down to 15 factors and tested it against a group of the 30 or 40 most representative renewals of the past year. We tested each of those factors against it, and identified correlations. For example, we looked at what number of users can accurately predict churn, if any? And that was our starting point.
Incorporate Quantitative and Qualitative Metrics
Positive conversations don’t always translate into renewals and usage metrics don’t always translate into product value. Incorporate checks and balances by combining metrics with spidey sense indicators.
Sonci: For those of us on the call that are in the earlier stages, or maybe we have relationships with customers that are with named accounts, we have close connections with them, you do have to be careful with how you think about their experiences. They might like working with you. They might find your interactions valuable, but that doesn’t mean that they find the product valuable and it doesn’t mean that they’re getting the value that they wanted to get in the time that they wanted to get it in. So asking key questions around, do you have connections with your key champions? Are they getting the perceived value they wanted when they wanted? And we can continue down that road.
After the Q&A, everyone joined small breakout groups to discuss their thoughts in more depth. We concluded the event with a general forum for everyone to share their questions. Here were some of the most interesting topics that we explored:
- How to create health scores for different customer segments
- Tying health score to ROI is important
- Identifying a short list of metrics based on time efficiency and cost
- Techniques for incorporating industry metrics
- Creating predictability through data
If you’re interested in exploring the topic of health scores in more depth, we have some reading material for you. This blog post, How to Strategically Score Customer Health to Drive Startup Growth, inspired our vision for the Community Hour.
“At its simplest level, customer health scoring provides you with a systematic, objective view into your customer’s relationship to your business. Your entire business relies on your customer’s success, making this insight incredibly important.”
Don’t Miss Out
If you didn’t have a chance to catch the live event, be sure to check out the recording. It makes for great podcast material, especially if you’re looking for something productive to do when doing other tasks (i.e. cleaning your kitchen or doing dishes).
You can catch the full recording here.
Be sure to share this resource with your team and peers — your LinkedIn network will probably value these insights. If you haven’t already, join our Slack community and sign up to hear about our next event. All are welcome.
This work was written by Ritika Puri and Jenna Kluger.
Jenna Kluger (06:47):
Sonciary Honnoll (06:48):
Jenna Kluger (06:52):
We’ll give folks a couple minutes to get in, but welcome. So good to see everybody here.
Sonciary Honnoll (06:59):
This is exciting.
Good to see you guys. It feels like an intimate conversation, like it’s just us three, but I know there’s a bunch of other people. You can’t see them, you can’t hear them, but they’re there.
Jenna Kluger (07:11):
Definitely feel free to introduce yourself in the chat. Say hello, say where you’re from, where you’re calling in from. Good to see everybody here.
Jenna Kluger (07:22):
As we get started, as folks jump in, you’re on mute, but definitely check out the chat, say hello, post some questions in the Q&A as we get started, but so excited to see you all. We’ll give folks another minute before getting started. Hey, Chelsea. Hey, Jonathan.
Sonciary Honnoll (07:42):
Jenna Kluger (07:45):
How’s everyone doing on this Tuesday? Hey, Darrell.
Jenna Kluger (08:05):
There we go. Hey, Ron. All right. As we get started, if you don’t know me yet, I’m Jenna Kluger. I’m the head of growth at Quala and co-host of Humans of Customer Success. So great to see you all for folks who have been with us since the start. And hello to everyone who’s new to Humans of CS. It’s great to see you here. We have this fancy new platform that we’re so excited to run this session on, provide even more opportunities for you all to engage and have fun on our community hour today.
Jenna Kluger (08:40):
As we are getting started here, we have lots to explore within Goldcast. Make sure to check out… Looks like everyone’s found the chat, the Q&A, and then up top, we have the agenda for today. So if you want to check out what today is going to entail as well as the about section to learn more about Humans of CS and Quala, which hosts Humans of CS, as well as our amazing speakers that you see here today.
Jenna Kluger (09:07):
We have such a great topic today. It’s a meaty topic with two amazing CS leaders. We are going to chat all about customer health scoring and strategies. Our discussion leaders will share how to create and implement a health score that fuels growth. I have lots of questions for them. I know you do, too, so I’m really excited to dive in.
Jenna Kluger (09:28):
After our initial chat, we’re going to jump into breakout rooms to discuss this topic deeper so that you can talk with fellow community members based on the types of customers you serve and the nature of your customer success organization. And then at the end, we’ll be grouped for the last 10 minutes so that we can share insights from those conversations. And also give you a chance to ask questions live for our speakers, because I know I have many. Awesome.
Jenna Kluger (09:55):
It’s my pleasure to introduce you to Sonci. She’s hopefully familiar to everyone here, but Sonci Honnoll is a cofounder of Quala and Humans of CS, and she’s going to be leading an interview with Michael today. So it is my pleasure to turn it over to you Sonci.
Sonciary Honnoll (10:09):
Awesome. Thanks Jenna. Thank you Michael, for being my coconspirator here, partner in crime and thank you for Goldcast. This is a fun opportunity for us to have a good conversation and connect one-on-one right now, and I can learn from you Michael, about customer health scores, and then have some breakouts after. A little bit about Humans of Customer Success, if this is your first time joining. We are a community of a few hundred customer success leaders. We like to get together every so many months and have a nice virtual connect or chat, a community hour. We also have a Slack group. If you’d like to join that, have some good conversations, just real time ongoing, there’s some good fodder and conversation that happens there. So Jenna, maybe you can pop a link in the chat and then give them the link if people want to be on Slack.
Sonciary Honnoll (11:01):
A little bit about Quala, a quick commercial here. We’re creating the next generation of customer success technology. We built a platform created by customer success managers for customer success managers. And our magic is that we blend qualitative and quantitative data together so that teams can better understand their customers day one, and build health scores that matter, which we’re going to talk about. You can learn more about Quala.io. That’s Q-U-A-L- A.io. It’s a play on qualitative. It’s not a play on the koala bear, which is a little bit unfortunate for us. Missed opportunities.
Sonciary Honnoll (11:39):
So Michael, really excited to dive in to this topic with you today, navigating health scores, kind of a controversial topic. Can be a lot of trial and error, so I’m hoping you can help us cut through some of the noise and maybe save some time, especially for us early stage startups or scaling companies around demystifying the health score. We’re going to talk strategically and tactically. We’re going to share about the why, when and hows of health scores.
Sonciary Honnoll (12:08):
So first maybe, Michael, you can talk to us a little bit about you, your background and your experience as a tech founder, focused on customer success.
Yeah. And actually before I dive in, is it a controversial topic?
Sonciary Honnoll (12:22):
Good question. It is. I have been chatting with so many people about health scores, because there is a line of thinking that they’re just total crap and because we can’t get them right, why should we even bother spending our time on them? So there are groups of CS leaders that are not so sure that this, customer health scores, are worthy of effort. I know we’re going to talk a little bit about that. And maybe if you feel that way, you can chat. Let us know.
Yeah, no, I thought it might be going in the direction of MPS is the most controversial other topic of does it work? Is it representative of true health and all that, but it sounds like it’s kind of a matter of, Hey, if it works…
But it sounds like it’s kind of a matter of, hey, if it works. I think everyone agrees the health score is great, but if it doesn’t and it’s kind of hard to do then is it even worth your time? So we’ll come back to that. In terms of an introduction, so like you said, Michael Marcus, part of the founding team at Jebbit. I was doing some of the mental math, and we started in, or I started September of 2011 from a Boston college dorm room. So one of those startups here in Boston, which there are a bunch of them. But when we started off, we were a platform for college students to answer questions about brands and get paid for it. Worked really well with college students who wanted to make $2 and 70 cents. I did sales, everyone else were sales or engineers.
It was really simple. And over the years, the way I got into customer success is just as a part of the sales team I started realizing the best way for me to hit my number was to renew and upsell customers. And the best way to do that was to create value. And I just really enjoyed consulting with customers and kind of stumbled upon the whole, I guess, holy grail of SaaS, which is retention. Net revenue retention if you’re getting even more specific. So about six years ago, I started the team of one customer success team and have scaled the team out since then. We’re about, I want to say, 60 some person company. We’ve raised about 18, $19 million series based stage. And now we have a platform that allows marketers across pretty much every vertical to create quizzes, surveys that are agency level, but all point and click, self-service, really easy to do. Customers like the NFL, NARS, Shiseido, bareMinerals, we were talking about before this. Proctor and Gamble, the like.
Sonciary Honnoll (14:56):
That’s awesome. It makes total sense that you find yourself in customer success having a sales background. And I think probably we could do a whole another call around what it’s like to be the first customer success manager on a team, understand the work that needs to be done to keep customers happy, healthy, and growing, and then move to actually building the team from there. So the CSM of one, and then the growth that happens after that is a total another topic that I’d love to dive in at some point. But if we keep on target, we talked about the controversy around customer health scores a little bit. So why should we care? What advice would you give to someone that is not really sure if this is worth their time, primarily to your point? Because how can I build something that I can really trust? So I guess the… Let me say it more crisply, how are you using your health score today?
So I guess as you bring up the controversy, one of the things that brings me back is I think the first place that I stumbled in the early days before we created our health score was I thought a health score needed to be that single source of truth. It had to be right or wrong, period. And I think the really important learning as we went through the whole process that’ll bring back to anyone who’s creating a health score from scratch is that the health score is like a teammate. It’s not the end point. It’s not the thing that just decides this will churn, or this will renew. It’s the piece that if you operationalize it correctly can be really helpful. It’s not going to be right every single time. And it certainly isn’t for us, but it helps spur conversation that creates great behaviors amongst the team.
And that’s what’s been most helpful for us. So I’m not sure if I’m really coming to your question. But I think just as you’re laying a foundation, first thing about why do you need this health score, and for us, the reason was very simply, we were putting our time in potentially the wrong places with our customer base. Our customer base grew, we had a team that was growing and we talked all the time about prioritization, where should I put my time? So it actually, the core of it really didn’t stem from predicting churn per se. It evolved to that. But it was how do you focus the team on the highest impact areas? First, how can we proactively flag customers who might be at risk? How can we proactively flag customers where there’s opportunity and let’s use an unemotional number and pair it around qualitative internal sixth sense so to speak.
Sonciary Honnoll (17:45):
Mm-hmm (affirmative). Mm-hmm (affirmative). I think the concept of the health score being a teammate is an important one. Just like one team does not own churn, it’s the entire company that owns it. Your customer health score is not the singular score to live and die by, it’s a very important input in how you use it. Obviously it helps… What am I trying to say? Connect or build on that importance. So let me ask you this, as far as building your customer health score, you mentioned a few goals that you had. Were those more qualitative, hey, we need something to help better understand our customers, or did you have some hard and fast goals around the customer health score that you wanted to achieve as a result of putting this together?
Well, I think at the end of the day, like anything we pour our time into, probably comes back to retention in some way. So at the end of the day all of us know there’s some room to improve retention. Either gross or net, depending on where you are. For us, we really wanted to focus on creating more value for our customers, spending time in the right place, more accurately predicting renewals. And I think if we had that dashboard, ultimately we’re going to improve retention. So that was a metric I was looking at. If the team is better set up to scale, to focus in the right areas, to spend their time in the right places, our retention should go up as a result.
I think the indirect benefit also is just when you start to give this data to other teams. So [inaudible 00:19:21] I work together with the product team to build the health score. And as a result, their understanding of the customer just went through the roof. It was a new understanding of the customer that they never had. And in building that health score dashboard, they could monitor it. And so it created new conversations of how healthy is our customer base? What customers are struggling right now and is there a trend that we’re seeing here? It was kind of that unemotional truth that kind of brought everyone together.
Sonciary Honnoll (19:52):
Got it. Okay. Okay. So the why sounds like for you guys, it helps facilitate communication between customer success team members and across the organization. Sounds like you created a clear goal around why you were creating the health score and what it was supposed to help you understand. And then from there you did a lot of work to actually create it, which we’re going to talk about in a second. But first I’m curious to know your thoughts on when. Is there any particular stage of a company where creating or building a health score makes sense? Would you advise some companies at certain stages, or maybe there are certain specific milestones or diagnosable problems like churn that might lead people to say it’s time for me to build a health score? Just a thought around timing for some companies.
Earlier, the better. Right away from the start if I could do it over again, I’d go right from the start. And I think the reason for that, it’s like the same question when someone’s like, “When should I use Salesforce?” You might not need it from the start. I can use my spreadsheets. But if I build the infrastructure when it’s most simple, and when I understand the customer best, you’re going to have a better foundation for a health score. It’s easier in the early days. And I mean, most of it is just setting up to scale. So the other piece also is, you get very tied emotionally to your customers when you’re a team of one or two. You know that inside and out. So we fell oftentimes in the early days into the trap of, they really like us. They get on the calls [inaudible 00:21:30] but actually proving value, are they using the platform? Maybe not. And sometimes we’re blind to that. So I think when you’re most influenced by emotion, it’s the early days. It’s when it’s simplest. That’s when I would start, for sure.
Sonciary Honnoll (21:44):
Good point. For those of us on the call that are in the earlier stages, or maybe we have relationships with customers that are with named accounts, they are enterprise level accounts, we have close connections with them, you do have to be careful with how you think about their experiences. They might like working with you. They might find your interactions valuable, but that doesn’t mean that they find the product valuable and it doesn’t mean that they’re getting the value that they wanted to get in the time that they wanted to get it in. So asking key questions around, do you have connections with your key champions? Are they getting the perceived value they wanted when they wanted? And we can continue down that road. But let me put a pin in that for a second and ask you, what did the makeup of the team and company look like when you put your customer health score together? Your trustworthy, the one that you’re like, this is working for us.
We were probably… Because it was about two and a half years ago. I want to say we were a team of 40 or 30, maybe. So again, all of it comes from, I think we were a little too late to the game. We went to one of our investor’s conferences. Someone gave a health score presentation and it kind of woke us up like, “Wow, this could be the most important focus of our next year.” We’re looking to double in size as a company and we don’t have something like this in place, how will we operationalize the team? So that was kind of the context of where we were. And it was just kind of as things were starting to take off.
Sonciary Honnoll (23:21):
Okay. Got it. Let’s move to the how. Probably the most important conversation that we can have today. And I noticed Todd, you had some questions, hey Todd, about metrics specifically. So maybe you could break down the key components of your health score. And I’m really interested in understanding how you went about discovering leading indicators. So many of us are struggling with leading versus lagging. And any pointers you have around your key components, how you developed them and what your process looked like, I think could be really beneficial for everyone listening.
Yeah, definitely. So the way we started out and I actually think this might’ve been the one thing we did right through the whole process was we just went to a whiteboard. We didn’t over-complicate it, it was nothing fancy. I’m pretty sure we came back from that conference and we put up a whiteboard, locked ourselves in a room. It was myself, another member of the customer success team, our data analyst and our VP of product. And the four of us were in there for three or four hours. And all we talked about were, here are customers who renew, why? Here are customers who churned, why?
What were some of the data… Let’s look at the data from the last year in those renewed and churned customers. What are some things that stand out that might’ve led to the renewal, that might’ve led to the churn? And we just wrote every category down. And I think at its peak, we had like 100. 100 potential factors ranging from incredibly specific to just broad. And obviously that’s an overwhelming starting point. And that’s when I sat down. I was lucky enough to meet Michael Redbord, who I know [inaudible 00:12:08]
Sonciary Honnoll (25:07):
Yeah. Hey, Mike. I don’t know if he’s on the call, but thanks, Mike.
He might be. But he’s more influential than I think he realizes in all of this. And he told me the story at HubSpot and he wrote about it in a write-up we had done which he said, “Hey, we were able to just eyeball of the four or five indicators that were most correlated to renewal at like an 80% rate, right?” At HubSpot, we nailed it basically from the start. He’s like, “Just take that list of 10 and hypothesize a couple. Take 10 or 12.” So we take the list of 100. I think we brought it down to 15 or 20, because it’s hard to actually just cut everything out. And that’s when we took it to our data analyst, Caroline Daugherty who’s unbelievable. If you have a data analyst who can work with you on this stuff, it helps. If you don’t, totally fine. Excel does wonders, but we took those 15-
… does wonders, but we took those 15 factors and she tested it against the group of like the 30 or 40 most representative turns and renewals of the past year. We just look back 12 months. We looked at, I don’t think we had 30 that churn, but as many as we could, that were representative in the churn and renewal column. Then we tested each of those factors against it, and she just came back with correlations. And that was our starting point.
Sonciary Honnoll (26:28):
When you say testing, you actually just looked at the data, you were… Okay. Okay.
Yeah. So what you end up with, and again, this can just be a spreadsheet, I’ll give you one that I did manually myself, which was, what number of users is the predictor of renewal? What number of users can accurately predict churn, if any? Sometimes you won’t get both. It was weird. I charted the numbers, I looked at, here all my churn customers, here are my renewed. I went into the data, I manually put it in Excel, and this number two came up. If they’re over two users, we renew like %90-plus. And if they’re two users, you turn like more than half [inaudible 00:27:10].
Sonciary Honnoll (27:10):
[crosstalk 00:27:10] How do you use that… Sorry to interrupt. How do you use that data then? You’re like, “Okay, I have this important bit of information.” How do you use that in an operationalized way to help CSMs affect that change? Or do you have a tech touch program that’s not necessarily like CSMs driving those behaviors?
Yeah. I mean, the majority of our business when we created the health score was high-touch enterprise. Okay. So the way we operationalized, it was like once we had the five or six factors that became the formula for a health score, we just put those health scores in front of the customer success team and operationalized it where weekly one-on-ones ran off health scores. “Hey, this logo is down too in their health score in the last 30 days. It looks like this factor was effective. They’re not building as much as they used to. What’s going on there?”
50% of the time, the CSMs would have a great reason for it, like, “Oh, they’re more campaign-based, they’re waiting for summer season. That’s when they really ramp things up.” “Okay. Not a red flag, perfectly fine.” In other cases, you get the aha moment of, “Oh, yeah. We’ve been having great calls, but I guess they’re not really actually doing anything from that.” And that’s when you escalate.
Sonciary Honnoll (28:31):
Okay. Okay. That makes sense. How is it evolving over time? I’m sure the customer health score is not one and done, you’re continuously tweaking it, or you tell me, how has it evolved over time?
Yeah. So there’s two main things we did. Like obviously, the five or six factors you pick might not be the right factors out of the gate, but it’s a great starting point. It gives you something to react to. So we’re always testing those 15 factors, we’re bringing them back, just to see is our customer base changing such that the factors, those five that we have, are actually now these five over here, like these three are still in place. But all of a sudden, integrations are a really great leading indicator for this new cohort of customers. So changing the inputs.
The second one that I think was more important was our onboarding score. We took our health score and we said, “Okay, we’re noticing the health score is not accurate in the first 90 days. It just consistently isn’t telling us much.”
Sonciary Honnoll (29:33):
And it’s not accurate because customers were churning or something else?
For example, let’s say like the threshold to get a green score on number of users in platforms like five users. Our customers might take 120, 180 days to ramp up where they’re introducing the platform to the rest of their team. So to be measuring them on day 30 in number of users where that’s just not part of their life cycle, it didn’t make sense. So there were other factors that we noticed like days to first login or number of log-ins in the first 15 days is a great indicator, for example, of renewal, just in the onboarding period. So that’s where just now we have two scores actually. First 90 days, everyone in our onboarding process, we call it jumpstarts, it’s our jumpstart score. And then we have our health score for everyone post day 90.
Sonciary Honnoll (30:27):
Oh, I love that. A jumpstart score. I’m going to steal that one. I’m sure other people on the call will, too. Okay. Then as far as… Oh, Jenna is back. Oh, man. [inaudible 00:30:40].
Jenna Kluger (30:40):
I know, right? I feel like we could keep talking and I’m fine, because we’re going to be jumping out to breakout rooms in a little bit, and then we’ll keep the conversation going at the end. But for all of our attendees in a couple of seconds, we’re going to be prompted to jump into breakout rooms. How it will work is you will get to choose which breakout room you want to join. They are based on the types of customers to serve, or how you serve your customers. So whether you have a high-scale approach, a high touch, maybe a little bit of both, or maybe you’re a new CS leader or within a startup, so you get to choose which room you join.
Jenna Kluger (31:17):
From there, make sure to do some quick introductions. It’ll be groups no bigger than 15. And we’ll have a question to get you going. So in your rooms, maybe start chatting about how have you developed a health score in the past that’s worked well, maybe not so well. I’ll leave you all with that, and we’ll come back here in 10.
Sonciary Honnoll (31:36):
Hey everybody. If you’re joining us from breakout Rooms, feel free to drop in the chat any good insights that came out of those conversations, and we’ll be regrouping in a moment, let everyone get settled back in.
Hello. Hello, had such good breakout convos, cannot wait to chat about them. So if you’re coming in from breakout Rooms, make sure to chat in any good insights from the convo, and if you raise your hand, we’ll be able to call on you to come upstage and hear any good insights from those convos. I know we had an awesome chat in our high scale group.
Sonciary Honnoll: (00:53)
Yeah. Maybe as the insights, if you guys share, Michael, you can comment on your thoughts on some of the things that everyone’s learning. Give everyone a few minutes if we have any hand-raisers. I have a list of several things that I learned from our group. I was in the startup breakout, so it was great.
Awesome. Let’s give folks a minute to join.
Sonciary Honnoll: (01:18)
Michael, which group are you in?
Michael Marcus: (01:23)
I was in a early stage, and it’s getting nostalgic.
Sonciary Honnoll: (01:28)
I was going to ask if you were getting PTSD.
Michael Marcus: (01:33)
I look back very fondly on those days. They’re crazy, but a blast. You’re just solving problems all the time. I think one of the things I realized just very clearly for anyone who’s just getting started and has a small team, doesn’t have a ton of resources and maybe seed phase for example, is like, what do I use to do this? Like, “Michael, I don’t have a data analyst like you did.” And, that’s a really good question that I don’t think I have a great answer for, but if we outsource it, get it going in the slack channel afterwards, I would love to know the answer to that question.
Sonciary Honnoll: (02:12)
Yeah. I can say from experience, of course I’ll plug Quala, because we work with a lot of early stage startups. We keep things simple. With that being said, many of us are using Google Sheets in order to understand the data that we have today and what that means for how to develop a health score that matters. So when all else fails, get back to that spreadsheet, whether it’s Excel or Sheets, and just again…
Sonciary Honnoll: (02:37)
Todd, who was in our group made a comment that I really liked. He, he mentioned focusing on actionable and usable data only. Don’t worry about getting every single data point you could possibly imagine, and then getting analysis paralysis where you’re actually not really sure what to do as a result of all the data. Focus on a few points. Maybe you have five, maybe you have 10, maybe you have three. Is it usable? Is it helpful? Are you deriving some sort of understanding of what that means for the value path for your customer? Great, focus on that. You don’t need every single data point.
Sonciary Honnoll: (03:11)
Not to mention a lot of cases, data points are scattered across so many different platforms. So until you can get that in one source, just focus on a a few small ones.
Michael Marcus: (03:24)
Yeah. That was a question that I noticed after we did the first part, which was like, is six factors in your health score the sweet spot? I’ve just found like four to six is kind of the place where you have enough that it’s meaningful, but it’s not too much that it’s just diluted. Then someone asked, is it just blended together? What we basically do is, each of the six factors gets a certain number of points, and then it’s all added up into a total score.
Michael Marcus: (03:54)
So the answer would be yes to blending on that question. It looks like more is coming through here.
One question I have for you that came up in our session was this idea of how do you create health scores for different segments? Knowing that not every customer looks the same within your base, and what does that look like? If you have some customers or different end-users, how do you segment that and then manage that as a leader on the team. Curious if you guys have any insights there.
Michael Marcus: (04:29)
Yeah. The first place that we’re looking to segment and we haven’t done it yet, but we need to. So obviously we had the general health score, and the first obvious thing was, well, this is not helping us in the onboarding phase. So we created the jumpstart score. The next piece is manage versus self service. So you guys have a blend. We just realized so many of the factors that were predictive of a self-service customer were platform centric. What am I doing in the platform? But when they’re buying services, they’re doing less of that. It’s just not an accurate indicator.
Michael Marcus: (05:03)
So we’re just going to rip the whole thing down and do that same analysis. Whiteboard down to 15 factors, whittle it down to four to six, and then operationalize that. That’s the first place I’d segment, but every business is a little different. where’s the cut it in half or cut it into two thirds and a third, and start there.
Sonciary Honnoll: (05:27)
Good points, good points. I actually want to suggest that Todd comes up, although I don’t know how it works, Jenna, you can tell me, but he specifically talked about his ideas around tying health score to ROI. So I don’t know, Todd, if you want to raise your hand, I would love for you to talk about key metrics that you started tracking and how you actually derived a cost per key metric so that you can understand if it’s too high, the customer’s at risk of churning. If it’s too low well, not too low. If it’s low, that’s good.
Here we go, Todd’s going to join us.
Yeah, you’re on.
Hey, good afternoon, everyone. So love the topic here and customer success, part of my internal DNA. So it’s great to have opportunity to talk with you guys a little about what we’re doing at Stenzel. What I was sharing with the group was when I got to Stenzel, we had no customer health score at all. We’ve basically taken the one baby step off of the ground to the idea of looking at shortlist of metrics, but in our world in Stenzel, it’s an email-agile content creation platform. So we have an outcome, an output of the platform when customers are using it.
So in amongst looking at all of the event data and whatnot, we decided that the two most important factors were when an end-user starts in email and finishes it, that finished email. So we look at the ratio of have started to finish, and then on the output side of it, we look at finished emails divided by monthly cost of subscription. And it gives us basically an average cost for email.
So we’re looking on a monthly basis, even from the first month out of the gate where customers are in their trajectory, and we talked about it internally about getting the plane down the runway and off the ground and then getting it to cruising speed and cruising altitude. Now every plane is different. Every customer could be a different point, but what we want to capture is on a monthly-going basis, are they moving in the right direction, and our value prop and impact is on time efficiency and costs. So that average cost allows us to contrast what they’re spending with us and the output of our platform against their spend. Then we sprinkle it with some industry metrics to say, “Hey, if you’re working with an agency you’re probably paying three or four X, what you’re spending with us.”
We develop that score, and then we went back at our customer install base and churned customers and looked at what that ACE metric was. And guess what? Our most stickiest customers had the lowest average cost, and that was indicative of having a really wide and strong relationship at many different levels. The customers that churned peaked and had a very high average cost.
Now I would also share with you the caution, and a lot of folks have said it out there. There’s not one indicator that gives you renewal. It’s about creating predictability. Yes, we have green customers that churned, and it gave us an opportunity to dig in and say, hey, based on platform activity and the output, they look green, but where did we miss? Where were we off on the executive engagement? Did we not have enough relationships? Was there adverse macro level conditions that changed outside of our control that changed our outcome within the organization.
Usually when we looked at it, we were able to kind of find that smoking gun and identify, A, we should have done something better, or collateral damage of acquisition or departments merging and other competitors being in that space. So we feel pretty good about the ACE, but we obviously, that’s our first level and we want to use that as our foundation, but we want to continue building up on that.
Sonciary Honnoll: (09:12)
Yeah. I love it. We have about 40 seconds left. So Michael, any parting words for everyone else? Just starting to build your house score, create it, you gave some good advice. Any additional words of wisdom in the last few seconds?
Michael Marcus: (09:26)
Yeah. So just building off of what Todd just said, I think the last piece I’d say is just get a health score out there. Analysis paralysis is what I hear the majority of people go through that just kills the health score. So get something out there, and when you have it, you can look at the green flags that you’re under, the red flags that renewed and adjust as you go, but just get something out there.
Sonciary Honnoll: (09:47)
Awesome. Thank you so much. That’s great. Thank you everyone for joining. Jenna, I’ll let you sign us off.
Yeah, this was so fun. Thank you all for bearing with us. I hope you enjoyed the breakouts, and thank you to Michael for leading us today. Have a great rest of your day, everybody.
Sonciary Honnoll: (10:03)