User Engagement: THE MOST CRUCIAL Metric You Aren’t Tracking for the SaaS Business (and how exactly to achieve this)

David Linder

David Linder

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

**Click here to look at Sherlock – our recently released product on Product Hunt now**

User engagement may be the lifeblood of each SaaS business.

Whether you run a light, freemium prosumer app; or perhaps a heavy, enterprise B2B app – the success of one’s business would depend on the engagement degree of your user base.

This is basically because the business style of SaaS is founded on retention.

It’s not about acquisition. It is possible to sign-up as much customers as you need, but should they all leave following a month – you lose. The complete SaaS business design breaks without retention.

And engaged users hang in there for an extended, very long time. Unengaged users don’t.

Without an engaged user base, you don’t have retention. Without retention, you don’t have a small business.

It really isn’t a lot more complicated than that.

So…if user engagement is actually this vital that you any SaaS business, exactly why is it so hard for some of these to answer some seemingly simple questions,

  • Who are my most engaged users?
  • Which are my most engaged accounts?
  • Is my total engagement increasing or down?
  • What is my most engaging event?
  • And a slew of other questions about user engagement…

I have always found it crazy that minimal SaaS businesses truly understands how engaged their user base is — now or higher time. Definitely not from the quantitative perspective.

Even though it’s super important.

In this post, we shall try to remedy that by installation of a framework for creating an important engagement score that may enable you to actually quantify the engagement of one’s userbase.

*Full disclosure — we built our product, Sherlock, make it possible for product teams to easily build, track and do something on a custom built engagement score. You can examine it out here.

Four steps for developing a User Engagement Score for the Product

STEP 1: Define Engagement for the Product

This first rung on the ladder for creating an engagement score is really a strategic step. In this task you have to consider what engagement opportinity for your unique product.

Active vs Engaged Users

A quick note about active vs engaged users. They’re not similar. Lincoln Murphy, among the best SaaS thought-leaders said it best:

“Frequently, I see people utilizing the terms ‘active’ and ‘engaged’ interchangeably when discussing user engagement. I believe it is a mistake. These terms are related…but usually do not mean a similar thing. You need “engaged” users…not only active users. A standard definition for engagement for most SaaS apps is: amount of logins. Seriously. It is a many more common than I wish it were (I view it ON A REGULAR BASIS), but this is one way plenty of SaaS providers measure ‘engagement.’ Logging in is really a proxy for a dynamic user, nonetheless it is obviously not engagement. Someone might login to your product to get the cancel button. Engaged users are those who find themselves logging in and utilizing the features which are driving value for him/her.”

I completely trust this perspective. We don’t have confidence in some universal definition of engagement that pertains to all products. Each product is exclusive. Each product has its nuances which define successful engagement. So…it’s vital that you define — specifically — what this means to be “engaged” together with your product.

For example, a B2B productivity tool could define “engagement” as a particular amount of projects created, tasks created, tasks completed, associates added, comments left, files uploaded, projects completed, etc.

A social networking application could define “engagement” as a connections made, posts/updates, likes, comments, etc.

The point is —  your product IS unique. Don’t try to escape from that fact. Embrace it and develop a engagement model in line with the important (and unique) activities which are vital that you your product. My guess is that you curently have advisable of what these activities are.

If you don’t, I will suggest an instant survey of one’s team. Ask everyone a simple question:

“What’s an engaged user of [our product]?”

They should answer with something similar to, “An engaged user of [our product] does X, Y, Z.”

You will receive some very interesting answers. Undoubtedly, some will undoubtedly be very qualitative while some could be more quantitative. None will undoubtedly be “right” (there is absolutely no “right”), but these responses from your own team will provide you with a great starting place for defining engagement and perhaps help you consider things you hadn’t before.

Regardless of the way you get there, you need to now have a listing of ‘engagement’ activities a user may take in your product (as well as beyond your product). It might look something similar to this:

ENGAGEMENT ACTIVITIES

  • Logged in
  • Added photo
  • Shared photo
  • Invited friend
  • Commented on photo
  • Edited photo
  • Posted to Facebook
  • Posted to Twitter
  • Opened email
  • Clicked on email

Once you have this list created (and don’t worry — things can change — you will end up iterating and refining this as time passes so when your product evolves)…it is possible to move ahead to Step two 2 – tracking these activities.

STEP 2: Start tracking these product activities (ie — events)

I’m assuming most SaaS teams scanning this already are tracking their important product events.

But if you’re not….what exactly are you looking forward to? Get hold of a Segment account and obtain it done.

No excuses…make it work (then move ahead to step three 3).

STEP 3: Weigh each ‘engagement’ event

Now you are tracking your important engagement events, the next thing is to weigh each event predicated on its impact, or its importance, to overall engagement together with your product. That is an important step because:

All activity isn’t created equal.

Certainly the act of inviting a fresh user to your product is really a more engaging act than logging in (as Lincoln Murphy argues). Writing an extended post on a social media site is more engaging than liking a post. Developing a project on an activity management application is really a more engaging than completing an individual task. And so forth.

So you should weigh these activities accordingly. Develop a table that appears like the main one below. List your engagement events on the left column, adding a column for Event weights:

sherlock event name event weight

You might have a score selection of 1–10, 1–100, 1–1000…anything you want. The main point is you need to give each event a spot value that’s consistent with its value to overall engagement. In most cases, more prevalent, higher-frequency events must have lower point values. Less common, lower-frequency events — those utilized by “power users” — must have higher values.

Then, for every among your users, you need to put in a column for the amount of times they triggered each event over a period (for instance, the final 7 days):

event name event weights amount of weights

Then simply multiply the function weight by the amount of events – it will appear to be this:

total event value

The total of most your own event values will provide you with a complete engagement score for a person user.

Then…just run this for every among your users and you may have the foundation for a quantified user engagement score.

you achieved it congratulations elf will ferrell gif

But don’t stop there. Next thing would be to give everything some meaning.

STEP 4: Give it Context

While this task isn’t essential for creating an engagement score for the product, it’s an important step to make that score valuable for the business. There are some methods for you to give this score context in order that it will help you make decisions:

1. RANK YOUR USERS

When all of your users comes with an engagement score, that provides you the chance to accomplish something amazing — actually rank your users predicated on their engagement. Which opens up so many opportunities. To mention several:

  • Discover your power users and discover why is them great;
  • Prioritize sales efforts to spotlight engaged accounts which will convert;
  • Prioritize customer success efforts to operate a vehicle great support, identify problem accounts and growth opportunities;
  • Drive more personalized marketing programs;

This sort of user ranking will help you understand your users in the context of these actual engagement together with your product — that is incredibly powerful.

2. CALCULATE OVERALL SCORE FOR THE PRODUCT

By calculating a score for every among your users, it is possible to aggregate those scores to generate an engagement score for the product all together.

user engagement score sherlock

By tracking this average score overtime, it is possible to determine set up work you do on your own product is in fact driving engagement.

3. COMPARE POPULATIONS OR COHORTS

A user engagement metric becomes tremendously helpful when you compare different populations of one’s of users. It is possible to compare the engagement of new users vs older users; users on a free of charge plan vs those on a paid plan; users with different access-levels; etc.

The opportunities to get insights by comparing engagement across segments are endless.

4. CORRELATE WITH OTHER BUSINESS METRICS

Ultimately, an excellent user engagement score can be an essential business metric — not really a product metric — for just about any software business. So, comparing the degrees of user engagement to other business metrics — like sales, retention, growth, LTV, etc is a good solution to ultimately predict and forecast business progress predicated on engagement levels.

And in the event that you don’t think user engagement is linked with the value of one’s business…read this (it cost Twitter over $1B in market cap): Morgan Stanley downgrades Twitter

Keep improving

Peter Drucker is well-known for saying,

“You can’t improve everything you don’t measure.”

This is obviously true with regards to user engagement. It’s an important metric for each software business — which means you need a solution to measure it and ensure it is actionable. Hopefully this post helps provide a framework so you can get a quantitative handle on engagement.

If you’d prefer to have something that does most of these steps for you personally, we are able to definitely recommend Sherlock – we’d want to hear your feedback!

About the writer: Derek Skaletsky may be the Head of Product and Customer Success at Kissmetrics. Previously, he founded the engagement automation app Knowtify that was acquired by Kissmetrics.

David Linder

David Linder

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

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