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Customer Health Scoring: How Top-Notch CS Teams Do It

How great customer success teams think about proactive health scoring, customer segmentation models & the future of CS.
Ben Winn
October 4, 2020

By the time we identify that a customer is showing behaviors that correlate with churn, it’s probably already too late –– that’s the problem with lagging indicators. 

We recently had the pleasure of joining our friends at Heap who hosted a webinar about this topic. In the webinar, we heard from the leaders of two top-notch Customer Success teams: Heap and Tubular Labs, about how they  successfully shifted their org’s focus from lagging indicators to leading indicators. 

There were plenty of insights and examples shared, so we highly recommend watching it –– click here to watch the recording

For our readers, we’ve put together this recap which covers the top three takeaways: 

  1. What role does Customer Success play in a company’s strategy? 
  2. How can you create a customer health score the entire organization can benefit from?
  3. How can you prove the value of your Product as a CSM?

Let’s meet our panelists...

First, we have our very own Edward Chiu, the CEO of Catalyst! Edward previously built and led the Customer Success organization over at Digital Ocean, one of the fastest-growing cloud companies globally, reaching $100M in revenue and over 1 million customers worldwide.

Next up, we have Lauren Magistro, the VP of Customer Success and Service at Tubular Labs. Over the last decade, she has built and led Customer Success and Account teams within the SaaS and ad tech space for various startups.

And lastly, Veronica Dasovich, the Senior Director of Customer Success at Heap. As the first Customer Success hire at App Annie, she was an early adopter of Heap, and now she leads several customer-facing teams there. 

What role does Customer Success play in a company’s strategy?

From leading a Customer Success team at a previous company to founding a Customer Success software, Edward has had a front-row seat in the evolution of the Customer Success role.

In 2019, LinkedIn ranked "Customer Success" as the 6th fastest-growing job –– and that's ahead of back-end and machine-learning engineering roles. Over the last few years (and especially since COVID-19), Customer Success has become an increasingly important function at companies and almost every CEO has been told by their board members and investors to double down on retaining customers. During COVID-19, that revenue is needed to help weather the storm.

What the best companies with the highest valuation have in common 

Companies like Zoom, Workday, Datadog, Twilio, and Alteryx are all top companies that have made customer success a company-wide initiative. These companies have some of the highest valuations in the world and they have one thing in common: high net dollar retention. These companies have net dollar retention between 120% to 140%, which has led them to be valued 20 to 40 times more than comparable companies in the market. 

Snowflake, who just set the largest IPO in SaaS’s history, with no surprise, has 158% net retention with an average contract value of $170,000 per customer. 

The best companies in the world don’t only retain customers, but they’re also incredibly successful at extracting additional revenue from their existing customer base.

You don’t need a CS team to have customer success be at the center of an organization.

Customer Success Model

Having customer success at the center of an organization doesn’t mean that every company will now have a Success team. It means that literally, every single department from Product to Sales will be acutely aware of Customer Success and make decisions with the customerit in mind. It will impact things like the product roadmap, market expansions, and marketing initiatives. That’s why Edward and his team designed Catalyst as a tool that can be used by multiple departments.

To summarize why we’re seeing this major shift and the importance of Customer Success, Edward highlights three factors: 

  1. Retention is becoming increasingly critical (e.g., what we saw with COVID-19). 
  2. Relationships will be the key driver in creating critical business value. 
  3. At many companies, CS teams are generating and owning more revenue than any other team.

At Heap and Tubular Labs, Veronica and Lauren both focused on prioritizing data and not just for their Success teams but for their entire organizations. During the start of COVID-19, they took a similar approach to identify their priorities, as they both knew that they needed to redefine their customer segments and their customer health score. 

Creating a customer health score the entire organization can benefit from

Creating meaningful health scores is incredibly challenging –– it's all about wrangling data, and not just any data, the right data. Veronica and Lauren take us through their approach to setting up their health score and how they use them effectively. 

Customer health score - Veronica at Heap


Before putting together their health score, Veronica knew they weren’t utilizing their resources effectively. Every customer was getting a fairly similar experience and service, so they kicked things off by defining their customer segments. 

Customer Segmentation Model

They learned that customers with large visual footprints have a higher amount of sessions, larger teams, and more data being requested by team members. Veronica and her team provided strategic resources for these accounts, both on the Success and Sales side.

On the other hand, customers that had smaller digital footprints had fewer sessions and smaller teams. They often required less high servicing touch from the Success team. 

The result of this was that they had clear alignment and a more efficient Customer Success organization, which ultimately created a better customer experience.

Product Metrics 

Heap is an analytics company, so they have a lot of customer data –– the opposite problem that a lot of CS teams have –– and therefore they didn’t know where to focus. They needed to understand which product metrics could predict renewals.  

Two quarters after implementing a new team, the Adoption Core team identified 18 metrics used in partnership with their data science team to test their renewal data. The biggest "aha" moment for them was that the “number of queries” was the product's success measure. 

Product Managers that run more queries answer more questions and use Heap more. In contrast, Product Managers that do not run queries aren't getting much value out of the product. 

Tying it all together 

Heap's Ops team is very lean, so they needed to find a tool that was flexible enough to send Heap and Salesforce data but also something that required low implementation. 

After looking at tons of vendors in the market, Catalyst was by far the best one for them. The main reasons: their bidirectional sync with Salesforce and the ease of implementation and flexibility of the tool. In just 30 days, they set up their health profile based on their new segments, and it's all powered by Heap and Salesforce. 

Customer Segmentation and Customer Health Scores

What that means for them is that they now have an automated health profile for each segment and the data to back it up. The CSMs now have valuable time to spend with customers, and they're not piecing together data in a spreadsheet. They're using this forecasting tool which has allowed them to have a more accurate estimate of renewals/churn and a more effective Customer Success organization. 

Customer health score - Lauren at Tubular Labs 

Similar to Veronica’s approach at Heap, Lauren at Tubular Labs began developing her customer health score by revisiting their customer segments.


Customer Segmentation and Service Levels

In the past, whichever customer screamed loudest got the most attention at Tubular. Creating segments helped pre-sales teams with their prospect, and allowed Customer Success to spend their resources on strategic companies. 

Health Score 

When Lauren joined Tubular Labs 3 years ago, they didn't have a health score. Instead, they were tracking usage data in a spreadsheet that was manually being updated by someone. Since that wasn't indicating much, they created Health Score 1.0:

Customer Health Score 2.0

Health Score 1.0 tried to find correlations between what churned/down-sold and the metrics surrounding those actions. Quarter over quarter, what they found were three major themes which then became three buckets in Health Score 2.0: 

  1. Power Score -They didn't have a good relationship with their power contacts (e.g., budget holder/decision-maker) 
  2. Value Score - They weren't driving enough value (which led to down-sell)
  3. Usage Score - They didn't see fair usage of the product and didn't have good adoption

As she thought back to the journey from Health Score 1.0 to 2.0, she highlighted the importance of driving partnerships across all different people/teams that would adopt the health score. Lauren believes that has made their health score successful. Without understanding their needs, the health score would have ended up being just another number with no behavioral impact.

How do you prove the value of your product as a CSM? 

At Tubular labs, they have a process they introduce early on in the sales cycle with their prospects. The Customer Success Managers and Account Managers then weaved this process into their touchpoints. This process hinges on making sure the teams are aligned on Critical Business Issues (CBIs). So far, they've identified three within their business: revenue, cost optimization, and productivity. 

Then, during QBRs and EBRs, Lauren and her team rely on their data from Heap to help demonstrate that they're driving a monetary ROI for their customer, which allows them to make the case that Tubular Labs is a "need to have" upon renewal. 

Lagging vs. Leading Indicators: Veronica at Heap 

Lagging indicators are critical to every business and are typically the most vital metrics that the Customer Success teams reports on. However, lagging metrics don't tell us how to improve these metrics. 

When looking at leading indicators, they're a lot more predictive in nature and are much more useful to impact performance. Leading indicators could be things like breadth of adoption or having increasing/decreasing “query” users (which again is a key metric Heap uses to determine product success).

Customer Success Leading Indicators Vs. Lagging Indicators

Heap recognized that they did not focus enough on leading indicators and had placed commercial expansion in the driver's seat. After learning that product adoption was the key culprit of churn, lagging indicators were showing up too close to renewal, so they couldn't do anything to impact the negative outcome: churn. 

Their approach was to include leading indicators in the CSMs day-to-day. With the health score now being powered by data, they can now show CSMs when an account has moved from "healthy” to “at-risk”. 

In Catalyst, the CSM sees a dashboard they call "the good morning dashboard," where CSMs can get a quick pulse on the leading indicators of health. The dashboard also helps them prioritize their near-term task, other updates, and key activities on their accounts.

Proactive Health Scoring

Leading indicators isn’t just driving CS; it impacts the entire company 

Veronica shared with us that overall, leading indicators are not just driving how Customer Success behaves but they are also influencing the entire company. 

To get the entire company oriented around Customer Success and looking at leading indicators, Heap introduced a new Salesforce data connector that sends Heap data into Salesforce, giving other teams access to all usage metrics. Now, the Sales team has essential health monitoring that informs their forecast, and Marketing can re-engage champions who have moved on to other companies to see if they want to bring Heap on board at their new company.



So, where is the Customer Success space going from here? 

Earlier this year, Edward and other Customer Success leaders put together an ebook on their predictions of CS's future. Here were their top three predictions:

  1.  CS will gain influence over revenue and new business decisions - Edward is seeing this at his own company right now. "It's no longer getting new business at all costs; it's ‘are we getting the best customers possible.’" 
  2.  Advances in automation will allow CS to go much deeper - The words "automation" and "scaling" go hand in hand. Companies are trying to figure out how to collect their data in an automated way.
  3. More specializations within CS organizations - Edward saved the most exciting one for last: jobs in CS are not only becoming very dominant, but also we’re seeing new roles like CS Ops, Onboarding/Implementation Manager, Solutions Engineers, and even Data Analysts for CS teams.

These predictions are things Lauren and Veronica mentioned earlier in the webinar. There is a stronger focus on aligning the rest of the team on customer success. Data and automation were crucial for both Heap and Tubular –– they can’t trust manually updated data. Lastly, we saw a specialization emerge at Heap called “Adoption Core”. Heap and Tubular Labs are phenomenal examples of companies looking ahead, acting proactively, and becoming increasingly customer-centric. Hopefully, the details outlined above will help to provide additional direction for companies who are looking to create predictive health scoring.

If you have any further questions, please reach out to us at

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