Key Performance Indicators Examples

Customer Health Score

A customer health score (CHS) is a metric that is used to evaluate the overall health of a customer’s relationship with a company. It is a composite score that is intended to provide a snapshot of the customer’s current status and potential future value to the company. The formula for CHS can vary depending on the company and the industry, but a common approach is to use a weighted combination of different factors that are deemed to be important indicators of the customer’s health.
The formula for CHS may include:

CHS = (A x W1) + (B x W2) + (C x W3) + …

  • A, B, C, etc. are the values of the different factors that are being used to calculate the CHS.
  • W1, W2, W3, etc. are the weights assigned to each factor, which reflect their relative importance in determining the customer’s health.

For example, a company may use the following factors and weights to calculate the CHS for its customers:

  • Recency of purchase (A) – weight of 30%
  • Frequency of purchase (B) – weight of 20%
  • Monetary value of purchase (C) – weight of 30%
  • Net promoter score (D) – weight of 20%

In this example, the CHS is calculated by adding the product of each factor’s value and its corresponding weight. The result of the calculation is a number that represents the customer’s overall health score. The higher the score, the healthier the customer is considered to be.

It’s important to note that the factors and weight used to calculate the CHS will vary depending on the company and the industry. The CHS is also a snapshot of customer’s health and it’s not a constant metric, it should be updated regularly to reflect the customer’s current status.

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