Product engagement can have a significant impact on the overall success of your business. Learn how to evaluate, track & improve it below.
For SaaS businesses, retention is key. Too much churn and you'll be spending more on customer acquisition than you need to just to keep your numbers trending in the right direction. This slows down growth, and can even kill a business. The most successful SaaS businesses use every tool at their disposal to increase retention and ensure that as many new customers as possible are contributing to growth rather than making up for churn. Understanding and improving product engagement is one such tool. In this post, we'll tell you everything you need to know about product engagement and how to use it as a growth lever.
What is product engagement?
Product engagement refers to how your customers are engaging, or interacting, with your product. Anytime a customer uses your product, they are engaged with it. However, understanding the nuances of how customers engage with your product is key to increasing the productivity of those engagements, and therefore, the perceived value of your product.
Why you need to understand and improve your product engagement
It's intuitive that customers who don't use the product won't find it worth the money. But we mentioned the importance of understanding the nuances of how customers engage for a reason. A customer that uses the product quite frequently isn't necessarily getting the most out of it. They aren't even necessarily getting what they want from it. Perhaps the customer doesn't know about certain features. Perhaps the features they want don't exist. Either way, those customers are also at an increased risk of churn.
When you understand and analyze how your customers are engaging with your product, you can find the features that are being underutilized. Are they not used because they aren't useful, or because you aren't communicating or documenting them well enough? When you look at the customer's process as they work through your system, is there anything you can do to make that workflow easier for them? These are the questions that can be answered through understanding product engagement. And improving them will maximize your customer's usage, leading to happier customers who stick around.
How to measure product engagement - 6 steps
Understanding how users make use of your product is great. But to improve engagement, you need to have some metrics that you can track over time. The steps below will help you take those measurements and understand what the data is telling you.
1. Set up product analytics
There are several great, free, tools you can use to keep track of analytics for your SaaS business. Almost everyone knows of Google Analytics, which is a great tool for tracking basic website information. Our own ProfitWell Metrics is another free option that's designed specifically for SaaS and subscription services. Metrics has an add-on feature called Engagement that will let you better track user engagement; this includes the effects of engagement on revenue. With ProfitWell Engagement, you'll be able to better predict which customers are at risk of churning.
2. Discover the most important metrics to keep track of
Depending on your business the metrics you need to track will vary; however, Between Google Analytics and ProfitWell Metrics, you'll find no shortage of metrics to be tracked. While most of them are going to be useful in some way, focusing your product engagement efforts on the most relevant metrics is important. The metrics listed below are generally a good start to gathering meaningful data about your product's engagement.
- Active users (DAU, WAU, MAU) - Daily, weekly, and monthly active users give you important information about who is using your product and when. If you have a lot of customers, but only a small percentage are regularly engaged with the product, then you've got trouble.
- Conversion rates - What percentage of people are signing up for a free trial, or upgrading to a paid tier or higher-priced plan? This lets you know whether customers see value in your product. If they aren't, your engagement numbers will suffer.
- Customer retention / Churn - These two metrics are flip sides of the same coin. Customer retention tells you what percentage of new customers stick around for a given length of time, and churn tells you how many customers leave over a given time period. See more about retention in the next section.
3. Measure product engagement score (PES)
In this case, PES is perhaps the most important metric to keep track of. So much so that tracking it gets its own section in our steps. Your PES is a combination of three factors: stickiness, feature adoption, and retention.
- Stickiness - This is the percentage of your users that come back every day, or every week. You can choose either time period for tracking this metric, just be sure to use it consistently.
- Feature adoption - A lot of your features may go unused. By tracking which of them sees the most usage by the most customers, say 80%, you'll be able to determine which features are most popular.
- Retention - This is the number of users who are still around after a period of time. Three months is a good starting point, though, like the other factors, you can choose whatever value you want as long as you stick with it.
4. Detect problem areas
Now that you're armed with data, it's time to figure out the factors that are preventing your product engagement from being as good as it can be. Is your new feature slow to be adopted? Are you not converting as many customers as you could be? Is churn happening much quicker than you'd like? All of the metrics you've tracked can be improved, but focusing on the problem areas first will yield more productive results.
5. Construct a hypothesis
Finding the problem is relatively easy; figuring out the cause of it can be more difficult. Low retention and low conversions may go hand and hand. If your marketing department isn't doing a good job of conveying, and repeating your value proposition, both metrics can suffer. You can guess whether a feature simply isn't liked or isn't promoted or explained enough by looking at the performance of similar features with the right CRO tools. The reasons each of these metrics are low will vary from business to business, but the data should guide you in the general direction of the problem.
6. Track and Measure results
You can't just assume your hypothesis is correct. Nor can you assume your efforts at improving product retention are successful. One of the primary reasons for tracking metrics in the first place is to measure progress over time. This will help you know whether your improvements are working, which in turn will help you confirm or eliminate a hypothesis. ProfitWell Engagement makes this easy by giving you a laser focus on engagement metrics and how they relate to your revenue and customer segments.
5 best practices for increasing product engagement
Identifying the problem and formulating a hypothesis are only the first steps to solving the problem. Before you can track your metrics and verify your hypothesis, you need to know how to boost product engagement. Obviously, the area to focus on will depend on the problem, but the tips below are things every SaaS business should be striving to do well.
1. Write engaging product copy
Engagement start with your product copy. If your copy isn't interesting, customers and potential customers won't be excited about your product. The tone and focus of your copy can go a long way toward getting customers more engaged as they actually begin to use the product.
2. Ensure a seamless onboarding experience for higher product adoption
Some SaaS products are difficult to use, and the company that created them does little to help new users learn. This is sure to lead to frustration and decreased engagement. By ensuring your customers can be as productive a possible right out of the gate, they're more likely to see benefit in the product and use it more often.
3. Provide exceptional customer support
Anytime someone needs an answer to a question about your product, they are going to be anxiously awaiting an answer. If they're on a tight deadline, they may even become increasingly angry if a resolution doesn't come quickly. Good customer support provides the opposite experience and keeps customers happy an engaged.
4. Listen to your customers & continually modify your product
One of the big selling points of SaaS over traditional software is that the customer gets updates as part of their subscription price. However, if there are no updates coming, the product can start to stagnate. By listening to your customers and improving your product frequently, you'll keep customers engaged.
5. Evaluate & tweak your product marketing campaign
You've learned how to determine which features your users find most valuable. This is important information to have, because now you can focus on those in your value propositions. Alternatively, you can try focusing on and highlighting features that are underutilized, but feel are valuable to the customer.
Product engagement FAQs
What are product engagement metrics?
Product engagement metrics are those key performance indicators that let you know how frequently customers are engaging with your product as a whole, and with individual features in particular.
What are the benefits of product engagement?
Customers who are engaged with your product in a meaningful and productive way are less likely to churn, which will increase the lifetime value of the customer and decrease your reliance on expensive customer acquisition strategies.
What makes a product engaging?
An engaging product is one that goes above and beyond the expectations of the user, providing them with all of the features needed to achieve their goals. Engagement is further enhanced when the product is easy to use and learning resources are readily available.