There are few things that tell you more about the overall health of your app than a good, hard look at user engagement. While acquisition and activation data give you important insights into the early stages of your user experience, user engagement gives you a look at the relationship over the long term. And for SaaS, long-term relationships are what it’s all about.
The tricky thing about user engagement is that it’s a little different for everyone. There is no silver bullet. The good news is that once you’ve accurately defined what engagement means for your product, there are a lot of ways you can influence it to build a stronger relationship with your users.
In this comprehensive guide to all things user engagement, we clear up some misconceptions about what user engagement is and isn’t, explain why it’s so crucial to SaaS success, cover the 7 key user engagement metrics (and the 4 biggest measurement mistakes), talk analytics, and walk through our 12 favorite best practices for improving user engagement.
Let’s get started!
User engagement is the lifeblood of your SaaS company. It is literally the thing that keeps your business viable in both the short and long term.
Put simply, engagement happens when a user is realizing value through an interaction with your product or brand.
Exactly what this looks like varies from category to category and from app to app. There is no single universal metric or benchmark that everyone can use to measure their user engagement. It’s all about understanding how your specific app creates value for your unique users at any given time in their user journey. (Pro Tip: How a user derives value from your app will change over the user/customer lifetime, so creating engagement is never a once-and-done kind of thing.)
However, no matter what kind of app you offer, who your users are, or where they are in the user journey, 2 things are always true:
• Engagement involves users taking meaningful actions in your product, again and again.
The goal of user engagement—which is typically measured in terms of the frequency and intensity of specific activity and interactions—is to make your product invaluable to your users.
All engaged users share some common attributes. Studies have shown that there are 4 distinct stages of engagement:
1. Point of engagement—When the user invests in the interaction
2. Engagement—When the user is actively engaged in completing actions or tasks
3. Disengagement—When the user stops activity
4. Re-engagement—When the user returns to the activity
These 4 stages make up a kind of engagement lifecycle—one that a user can go through multiple times in the course of a single session or over the long-term relationship with a product. In general, strong engagement requires that an app maintains a user’s attention and interest. (Which brings us back to the idea of delivering value. When you deliver tangible value, users become and remain interested.)
Interestingly, disengagement can be either positive or negative. While a user might disengage because they are bored or frustrated, they might also disengage temporarily because they successfully met their objective. In either case, the goal at this point is to inspire reengagement via timely and relevant communication such as in-app messaging, push notifications, and email.
An important takeaway: Engagement is not an on/off switch. It exists on a continuum from completely disengaged to highly engaged (a power user). Maintaining and increasing engagement, therefore, requires an equally expansive and flexible strategy that addresses all the shades of gray in between.
Many people use the terms “user engagement” and “customer engagement” interchangeably, but there are some important distinctions to make.
Companies using the term “customer engagement” typically embrace a high-touch relationship model. “User engagement,” on the other hand, is most often used by organizations leveraging a low-touch relationship model. Teams focused on customer engagement may invest more in in-person product training, for example, whereas teams focused on user engagement may invest more in their in-product onboarding experience.
The difference between a high-touch and low-touch relationship model can be defined by the one-to-one vs. one-to-many approach of customer interaction.
• Low-touch relationship model
• Greater contract value per account
• Product is more complex
• High-touch relationship model
• Lower contract value per account
• Product is less complex
TL; dr: No engagement = no customers = no revenue = no business.
Active and engaged users are the foundation of every successful SaaS company—without a steady stream of users regularly using your product, you don't really have a viable SaaS business. And you certainly won't achieve product-led growth.
That's because the SaaS model only works if your customers keep paying month-over-month. Even the healthiest SaaS companies can take upwards of 5 to 7 months to start generating positive revenue.
Without engagement, you get the familiar, tragic story of quick initial growth followed by a drop in signups, churn, and increasingly difficult acquisition. The reason so many companies end up riding this kind of shark-fin curve is that they aren't looking at the numbers that really matter.
The hard truth is that an awful lot of people who sign up for a free trial will only use a product once before abandoning it. Signups on their own can be a vanity metric that gives you a good feeling, but doesn't necessarily signify success in generating loyal customers. In order to grow, teams have to not only acquire new signups, they also need to engage them so they become avid users and, eventually, paying customers.
It really is that simple. When your users are more engaged, they are more likely to keep using your product. They are also more likely to level-up to a paid product and promote your product to their friends and colleagues. All of these factors contribute directly to your overall profitability.
As Peter Drucker famously said, “If you can’t measure it, you can’t improve it.” So, to improve user engagement, you’re going to need to get a really good handle on what’s working and what’s not.
Tracking how many users remain truly engaged with your product is a great indicator of overall product health, and any changes in this metric can be a leading indicator of potential problems down the road.
In the simplest terms, the engagement rate represents the percentage of users who remain active within your product over a defined period of time.
Looking at your overall engagement rate gives you high-level insight into 2 key areas: churn and retention. Churn and retention are effectively 2 sides of the same coin. Obviously, for growth, you want less churn and more retention. It’s helpful, however, to measure and analyze both.
If your engagement rate is dropping/churn is going up, that’s a valuable early warning that something is wrong. It’s an opportunity to identify exactly where your product is falling short so that you can create a better user experience and reverse that trend before it takes you down.
If your engagement and retention rates are going up, you know you’ve found your secret sauce. You’re successfully delivering the value that users want. Keep doing what you’re doing, but don’t stop searching out new opportunities to drive even more engagement.
By digging a little deeper, you can measure and analyze a whole range of specific behaviors to gain insights that can help you with things like:
• Prioritizing and targeting your sales efforts
• Optimizing your customer success efforts
• Refining your product messaging
• Identifying potential user advocates
The first step in a successful metrics strategy is knowing what to measure. The metrics that matter most change depending on the type of product. Some examples:
• Media site: News outlets and blogs often depend on ad or affiliate revenue, so these types of sites are most concerned with daily usage, time on site/page, clicks, comments, and shares.
• Ecommerce app: An online retail outlet will be most interested in metrics that reflect buyer intent and conversion, so they focus on things like visit frequency, site usability, adding items to cart, cart abandonment, and product reviews.
Apps—enterprise or otherwise—usually focus on app launches, time spent, and the quantity and specific type of actions completed.
Before we get into the nuts and bolts of what to measure and how to measure it—a word of caution on a few common mistakes.
For better or worse, there are a lot of ways to measure engagement, and which ones will give you the most valuable insights depends on the unique nature of your app and your users. In general, you want to choose the metrics that are most closely related to your app’s core value.
To find the right user engagement metrics for your product, you need to ask yourself the right questions.
Who are my power users, and what attributes do they share? Which features do customers use the most/least? What percentage of users are successfully completing key actions?
Aggregate user engagement is typically measured by day, month, or year:
• Daily Active Users (DAU)
• Weekly Active Users (WAU)
Stickiness is an indicator of long-term retention. The stickier your app is, the more frequently a user comes back to your app. The more frequently a user comes back to your app, the more likely they are to evolve from being a monthly active user to being a daily active user.
One way to calculate stickiness is:
(Daily Active Users/Monthly Active Users) x 100
You want the resulting percentage to be as close to 100 as possible.
Another way to calculate stickiness is to find the average between your user retention and engagement rates:
(Retention rate + engagement tate) / 2
Net Promoter Score (NPS) is one of the most helpful tools available for measuring customer satisfaction and collecting feedback.
NPS is sometimes criticized as an oversimplification of user sentiment—but when combined with smart product analytics, segmentation, and targeting, it can be a powerful tool for identifying your champion users or, on the flip side, accounts at risk of churn. Used correctly, the Net Promoter Score also provides valuable insights that can be leveraged to make impactful product decisions.
NPS is a very specific kind of survey consisting of a single question asking customers how likely they are to recommend a brand, product, or service. Based on the responses, customers are split into 3 groups: detractors, passives, and promoters. The formula looks like this:
NPS is simple to calculate, provides both qualitative and quantitative feedback, and is quick and easy for users to answer. The keys to making the most of NPS are to:
• Allow users to share additional details about their score.
• Target the right users (folks who have been using your product for a significant amount of time).
Your feedback response rate is an indication of how invested users are in your app. If you’ve earned a high feedback response rate, that’s proof that your users care enough about your app to tell you what they think.
Their willingness to take the time to share their experiences and insights is a tip off that they’re in this for the long haul.
You can help increase feedback response rates by delivering surveys directly in your app, rather than via an email or other channel. In-app surveys can be triggered based on a specific action, which increases their relevance to the user and improves chances of a response.
Knowing something is good. Understanding something is better. Analytics tools help you get to the bottom of why certain engagement metrics are trending the way they are. They help you uncover the patterns and information you need to make more effective decisions about how to influence engagement in a positive way.
Affordable and out-of-the-box analytics tools—like Mixpanel, Amplitude, and Heap—have made it easy to measure product engagement by customer. With tools like these, you can gain deeper visibility into engagement with reports on metrics such as: which features are being used by which personas, which cohorts are likely to churn, and how far new users get before dropping off.
You can also marry your quantitative data with qualitative analytics to create a flywheel of continuous product improvement. For instance, you might use a high-level view to focus attention on your biggest challenges and opportunities, and then "zoom in" to the user’s level through qualitative research by using tools like Fullstory to deepen your understanding of—and solve—the problem.
The most important thing to remember is that analytics are a way of listening to your users. And listening to your users is more than just counting clicks. It’s about actually making sense of their behavior—which pages they visit, where they travel next, where their mouse hovers, and so on. Your users are constantly giving you feedback. You just need to learn how to decipher it.
Because user engagement is part of every touchpoint between a user and an app, there are many different ways to influence it.
In this next section, we’ll take a look at 12 best practices for improving user engagement, regardless of your audience or product.
Better user engagement is a goal that must be supported across your entire organization—everyone has a role to play and a job to do. Since everyone has a hand in driving user engagement, it makes sense to empower everyone to work proactively toward improving it.
• Step 1: Break down the walls between product and marketing to create a cohesive, omnichannel experience that tells the same story across all channels.
• Step 2: Take an all-hands approach to customer support. Having all employees—from developers to product managers—spend some time on the front lines keeps your entire team in touch with the personalities, pains, and wishes of free trial users and paying customers.
Since engagement evolves over the user journey, an earnest attempt at improving it means boosting habitual product usage at every turn. A strong focus on communication and user engagement can help combat churn within your existing customer base, keeping your users up-to-date on product changes, and helping you identify issues before they become bigger problems.
Another great communication tactic is to celebrate user success. When PMs think about user retention, they often think about the first few days or weeks after signup.
But SaaS companies are under constant pressure to prove their value to users again and again. Every unengaged customer, regardless of how long they’ve been using your app, is in danger of churning. That’s why paying attention to late-stage retention is paramount. When the excitement of the new app has worn off, you have to concentrate on 3 things:
• Acknowledging small achievements
• Reminding users of your product's impact
Engagement loops are the things users do repeatedly when they are fully engaged with your app. Based on the game theory that makes video games and other systems so addictive, there are 4 main stages to an engagement loop: initial motivation, action, feedback and/or reward, and an emotional response.
Done well, gamification can be an effective way to keep your users engaged and make accomplishing necessary tasks more enjoyable. Done poorly, it becomes distracting and gimmicky.
It’s important to avoid getting caught up in the novelty of gaming—don’t lose sight of the true purpose of your app. An engagement loop should support and enhance the user experience, not take it over entirely.
Figure out what matters to your users by asking questions or tracking data; then use gamification to enhance or improve the features and functions that your users care about.
• Identify the things within your product that correlate to user success—activation events, sticky features, etc.
• Segment users and track how each group uses the product to help you find and address their pain points.
User engagement happens outside your app, too. Setting certain events to trigger a timely email can be a great way to reinforce the guidance you're providing within the product through another channel, making it more likely that users will take action.
Some examples of behavioral emails that you can send:
• Activation/sign-up emails. Welcome emails have some of the highest activation rates of any type email—they're the perfect opportunity for you to introduce your brand and to start building a personal connection with your users.
• One-off emails for specific events. You can set specific in-app events to trigger emails that offer more detailed explanations about certain features that the customer is already using—without interrupting their work in the moment.
• Educational drip sequences. Teaching your users about product features and benefits over time can nurture habitual use and help customers to get the most out of your product.
User engagement is not a once-and-done task—it’s an ongoing relationship between your users and your app. And we all know that relationships evolve over time. Things change. People grow. They want different things. Keeping your users engaged is all about keeping pace with that change so that you’re always able to deliver value your users can’t live without.
We hope this post provided some helpful information to get you started. If you’re ready for a deeper dive, we have plenty more resources to share:
• Head to the Appcues Blog for more in-depth content on user engagement, growth, UX design, product management, and more.
• Check out ReallyGoodUX for weekly UX design inspiration from our favorite products.
• Sign up for The User Onboarding Academy to deepen your onboarding knowledge with 5 comprehensive lessons on the proven EMBED framework.
• Finally, join us over on the Product-Led Growth Collective, a community-driven resource, made for growth-minded folks, by growth-minded folks.