User Engagement: THE MAIN KPI You’re not Tracking (but ought to be)

David Linder

David Linder

MSc in Marketing from the University of Salford. Facebook Certified Planning Professional Facebook Certified Buying Professional
5 min read

“The purpose of a SaaS CEO ought to be to raise the profit they make from each customer (LTV), and lower the expenses in sales and marketing that it requires to obtain each customer (CAC). Measuring Customer Engagement is just a key tool that may help you make that happen goal, since it will help you to boost your trial conversions, which directly reduces CAC. And it’ll help you decrease your churn rates, which directly increases LTV.”

– David Skok, https://www.forentrepreneurs.com/customer-engagement/

I think every SaaS CEO would concur that user engagement may be the lifeblood of any SaaS business.

These CEOs understand that the SaaS business design is dependant on retention. And that retention would depend on engagement. Unengaged users simply don’t hang in there and certainly don’t continue steadily to pay for something.

So…no engagement, no retention. No retention, no business. Therefore, given the transitive property of SaaS…no engagement, no business.

If this is actually the case, then why isn’t user engagement among the top KPIs for each SaaS business? Why isn’t it a metric that’s featured atlanta divorce attorneys executive team meeting? Why isn’t it called out in board decks or posted on every company dashboards?

Probably because, until recently, user engagement is a difficult thing to measure.

How can you measure user engagement?

Conceptually, calculating user engagement is pretty self-explanatory.

TOTAL USER ENGAGEMENT = NUMBER OF ACTIVE USERS x AVERAGE ENGAGEMENT PER USER

This is really a simple formula your product’s overall engagement score. It is possible to measure it as time passes by calculating it on a daily/weekly/monthly basis and it’ll indicate whether your total engagement is certainly going up or heading down.

engagement as time passes

Measuring the initial area of the equation – Active users in a period period – is pretty easy.

The second area of the equation – average engagement score per user – may be the tough part. But that’s where the magic lies. So…how will you discover the average engagement score per user?!?

Well….this is exactly what Sherlock was built for.

Calculating user engagement scores in Sherlock

Sherlock was built as a user engagement scoring application – a perfect solution to give your product data the important context that means it is actually useful.

With Sherlock, users weigh all of their important product events on a scale of 1-10:

sherlock engagement scoring

At which point Sherlock calculates an engagement score for every user in line with the amount of times each user triggered each event times the weight of the function. Used, the calculation appears like this for every user:

total raw score sherlock

From there, Sherlock calculates a raw engagement score for every user in line with the above model and normalizes that score across a product’s entire customer base. The effect is that each active user is given a score between 1-100.

top engaged users sherlock

Looks cool, but how will you get from here to overall product engagement?

Well…pretty easily. When every user comes with an engagement score, these scores could be aggregated to calculate engagement at several levels above the average person user level. For instance, you can view engagement:

  • At the account level;
  • At the precise segment level; and, of course
  • At the merchandise level

By aggregating these individual user engagement scores across a whole user base, Sherlock can calculate the 2nd half of the merchandise engagement calculation defined earlier:

TOTAL USER ENGAGEMENT = NUMBER OF ACTIVE USERS x AVERAGE ENGAGEMENT PER USER

Voila. At this point you have a KPI which you can use along side the rest of the important metrics that you utilize to measure the health of one’s business.

engagement as time passes

From here, you can begin to assess your organization efforts from this overall engagement score.

How are you currently new features affecting engagement? Think about your brand-new onboarding plan? Think about your product marketing efforts? Think about retention/churn/upsells? Etc.

And you’ll have a new KPI to greatly help drive your important, high-level strategic decisions.

Taking another level with engagement scoring

While measuring total product is essential there’s also many other known reasons for quantifying user engagement scores. By quantifying user engagement, it is possible to:

  1. Help prioritize your Sales efforts: When you have a free of charge trial or freemium product, then it’s essential your sales force prioritize their efforts on the accounts which are most engaged.
  2. Optimize your Customer Success efforts: The majority of your CS team’s important efforts can and really should be prioritized predicated on user engagement. From identifying
    upsell opportunities to re-engaging risky users to everything in-between. Everything could be assessed and prioritized predicated on engagement-levels.
  3. Refine product messaging: Target users and accounts predicated on engagement.
  4. Identify potential advocates: Your most engaged users are your probably advocates.
  5. Forecast your organization: User engagement is really a leading indicator of one’s SaaS business’ health. By quantifying engagement, you could start forecasting the continuing future of your organization.

Try Sherlock

To start quantifying user engagement for the SaaS business, it is possible to signup for a free trial of Sherlock today.

David Linder

David Linder

MSc in Marketing from the University of Salford. Facebook Certified Planning Professional Facebook Certified Buying Professional

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