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Signal Setup Best Practices: Building an Effective Early Warning System

Best practice for choosing Signal Flags and Categories

Updated over 2 months ago

Setting up signals in Hook is one of the most impactful ways to proactively manage your customer portfolio. When done right, signals become your early warning system that helps you spot opportunities and risks before they become critical. Here's how to set up signals that actually drive action.

Start With Outcomes, Not Activities

Think of signal types as the outcomes you're trying to predict or prevent. Focus on business-critical results rather than activities:

Risk Signals:

  • Churn Risk - Customers showing early warning signs of potential cancellation

  • Contraction Risk - Accounts likely to downgrade or reduce spend

  • Break Clause Risk - Customers approaching contract break points

Opportunity Signals:

  • Expansion Potential - Accounts ready for upsell conversations

  • Renewal Likely - Positive momentum heading into renewal

Neutral/Monitoring:

  • Watchlist - Accounts requiring closer attention without immediate risk

Define Categories Around the "Why"

Signal categories should capture the underlying reasons behind customer behaviour. Start with these two key questions:

1. What Do Your Executives Always Ask?

Think about your regular leadership calls. Common executive questions become great signal categories:

  • "Who's at risk due to competition?"

  • "Which accounts have budget constraints?"

  • "Where are we losing champions?"

  • "What product gaps are causing issues?"

2. What Are Your Primary Drivers?

Think about what drives risk and opportunity at your organisation. Here are some common categories to consider:

  • Champion-Related e.g. Gain/Loss of Champion or Lack of Champion Engagement

  • Business Drivers e.g. Budget constraints or M&A activity

  • Product & Technical e.g. Tech/Product Issues or Gaps or Adoption challenges

  • Competitive & Strategic e.g. Competitor/Other Tools or ROI concerns

  • Growth Indicators e.g. New Features requested or Growth in Licenses

Implementation Tips

  1. Start Simple: Begin with 3-5 signal types and 5-8 categories. You can always add more as you learn what's most valuable

  2. Align With Your Process: Categories should match how your team actually thinks about and discusses accounts

  3. Test and Iterate: Signals are easy to modify. Start with your best guess and refine based on what drives the most valuable conversations

Common Pitfalls to Avoid

  • Over-categorising: Too many categories create noise rather than clarity

  • Activity-based signals: Focus on outcomes, not just engagement metrics

  • Set-and-forget: Review and adjust categories quarterly based on what's actually useful

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