SaaS: The Rules of Product Engagement
Learn what is customer engagement score and how to increase customer engagement level on your product. Check how to measure SaaS engagement model here.
With the growth of the SaaS industry, more and more Product Management teams are wondering as to how they can measure a very important aspect, and potentially the strongest leading indicator of success for SaaS Platforms: User Engagement.
User Engagement refers to a set of metrics that can track how many users are actually interacting with your Mobile App or SaaS Platform and to what extent. As a Stakeholder, Product Manager or a CEO of a tech company revolving around a product, it is imperative to keep an eye on actual usage of the product, at a customer as well as an end-user level. Both lead to insights that can help course correct (while you still have time), or create additional options of growth to thrive in an ever-increasing competitive business environment.
The goal of a SaaS or Mobile App CEO should be to increase the LTV (Lifetime Value) from each customer. It is obvious that measuring customer engagement & user engagement is a key tool that will help them achieve that goal. By getting a true measure of engagement, actionable decisions can be made about:
The need for measuring engagement is not new. For the last decade, several studies and reports have been available in the market. Few of them that are worth noticing are:
2. Similarly, a study focused on branded mobile phones by Kim, Lin & Sung, 2013 noticed that most of the tech products incorporated at least one of the seven Engagement Attributes: Control; Customization; Vividness; Multi platforming; Motivation; Feedback; Novelty.
3. Another study by O’ Brien, 2015 concluded that there were 3 Primary information sources for measuring user engagement, with different characteristics:
4. Finally, a study by [Peterson et al, 2016] reported that Tech App Engagement is best measured as a consolidation of 8 Indices: Duration index, Loyalty index, Retention index, Feedback index, Performance index, Recall index, Social index, and Interaction index.
While the value of being able to measure engagement has increasingly been felt by most Product Owners, Managers, and IT Professionals, it has been tough getting hold of a solution that really delivers. In July 2018, Gartner published the following report that lists some solutions that can help you measure engagement. You can download the guide through this link: Market Guide for Web and Mobile App Analytics.
While the solutions above help in getting some idea about the engagement levels, after trying them out, we figured that there were a few gaps. Each of these solutions was providing a bunch of measures or metrics, without helping put them together into a consolidated and meaningful product engagement score.
Also, engagement is a moving target. What engages customers and users today fails to keep them interested in a couple of quarters down the line. Hence, the algorithm to measure this needed to be flexible enough to add or modify parameters as and when required.
We were looking for a solution that could give us a consolidated product engagement score, and then provide insights so that we can drill down on each of those parameters for further analysis. We also wanted to see if we could build a solution that could help influence people engagement positively, and then be able to track if the actions taken actually led to an enhancement of engagement.
We were also looking for a solution that could help us understand how we were doing on engagement, relative to other Apps or SaaS Solutions, and not always as an absolute. And finally, we were hoping that with ML and AI being built into the solution, over time regression would help polish the algorithm and fine-tune the output for even better results.
Based on our research on the history of engagement processes, and the gaps we found in them, we designed our own solution to measure all the aspects of a SaaS customer engagement process that a subscription-based business needs. This product engagement score is designed around 4 indices based on which a holistic insight can be obtained. They are:
Let’s look at them individually.
While this article is by no way exhaustive, we hope it is enough to showcase how important quantifying user engagement is for your business. It is much more than a simple metric. It is something that can have a significant impact on business processes across an entire organization that is based around a Mobile App or SaaS platform. In fact, we strongly believe it might just be the MOST important metric for any SaaS business.
We developed the Product Engagement Score to make it easy for all SaaS businesses actually quantify user engagement—and integrate it with all their essential business functions. We would love for you to check it out. You can start your 17-day trial today to gauge your product engagement score!
We are the SmartKarrot Team. We design, we build, and we derive fun out of solving problems in the Venn overlap of tech and real life. Thanks for reading!
Originally Published May 13th, 2020, Updated January 6th, 2021
Surojit has over 15 years of experience in quality and implementations. He is a promoter of an extremely light and efficient Agile process to fit business needs. In his prior role as product owner, he built a robust product in a very short span of time.