In a very interesting discussion about SaaS Metrics — specifically Average Revenue Per Customer -because I’m all about Customer Success, the notion of an “Average Success per Customer” was floated by Joseph Bentzel on Growthackers.
Well, we already have a Customer Success metric like this, and it’s called a Customer Health Score.
The Customer Health Score — or at least how we see it at Gainsight both as a metric we measure and in our product – is a mix of qualitative and quantitative data inputs that indicates the likelihood that a customer will expand their use of our product, stay a customer but not grow, or if they’re a churn threat (with some level of nuance between those).
You can certainly look at your Customer Health Score in aggregate, as a roll-up across all customers, and in fact, we’re seeing more investors/boards wanting to see this type of data along with the more typical SaaS metrics.
However, just like most roll-up, aggregate metrics, they aren’t truly actionable at that level, so I always recommend looking at Customer Health – and any key SaaS metric, really – on a cohort basis.
So I’d actually look at your Customer Health Score for each logical segment of our customer base (by revenue, margin, on-boarding speed, expansion potential, etc.) to see which are my healthiest customers (the most likely to grow) and which are the least healthy, and use that to help shape how we move forward.
It may not be the end-all, be-all in the decision on what customers to go after (healthy doesn’t directly mean most profitable, for instance), but clearly, if a certain customer segment isn’t healthy (has high churn with a cause that’s beyond my control), maybe I don’t want to actively go after more customers like that, right?
I go into a lot more detail on different strategies and tactics around SaaS Marketing, Pricing, Growth Hacking, etc. on my Sixteen Ventures site.
This post was originally published on LinkedIn.