Can you say with certainty that you’re going to hit all your sales targets this year?
You see, often businesses prioritize historical and current sales data to make their pipeline forecasts. But when they’re way off the mark, they are utterly confused about what they left out. After all, they accounted for everything that mattered.
Everything except customer engagement metrics.
And when you don’t analyze how consumers interact and experience your products, how could you possibly predict your revenue stream?
Curious to learn how it all fits together? From the metrics to track to the tools to use and the strategies that work best, this article breaks it down for you.
Let’s get started.
Introduction to customer engagement metrics
Customer engagement metrics are data points that assess audience interaction, satisfaction, and involvement with a brand or product. In a way, they quantify consumer behavior and offer better insights into market preferences.
It’s important not to confuse these metrics with other performance indicators. For instance, click-through rates can reveal the interest a company’s marketing content generates. However, it won’t shed light on why and how clients relate to that copy.
Put simply, customer engagement is all about a brand’s intrinsic relationship with its target demographic. And when businesses measure and drive it effectively, they can:
- Anticipate shifts in market behavior to adjust product design/campaign strategy
- Map out the buyer’s journey to pinpoint specific purchasing triggers/motivators
- Foster deeper customer relationships that go beyond mere commercial intent
Studies indicate that a dedicated digital customer engagement model can boost revenue by 123%. That’s not all. Organizations that consistently incorporate such metrics into their marketing and production plans are 41% more likely to grow their conversions.
Key benefits of measuring customer engagement
While it may not seem like it, regularly tracking the metrics for customer engagement can significantly affect your bottom line. Specifically, they can help you improve it by:
- Enhancing brand-consumer relationships: These data points provide information on how to tailor your products and services to fit your customers’ precise needs and preferences. In doing so, you establish your brand as the market’s go-to option.
- Improving brand loyalty and trust: Engaged customers will often associate your brand with positive markers. This can help you carve out a unique position in the market and stand out from your industry peers.
- Boosting customer retention rates: Consumers who are loyal to your brand will turn to your products over your competitors. In short, they offer you a steady revenue stream through repeat purchases.
Besides that, satisfied and involved customers are often the best source to collect positive reviews and testimonials. They are also more inclined to recommend your products and services to others.
Understanding 7 Critical Customer Engagement Metrics
When it comes to customer engagement metrics, there are plenty to choose from. But since we’re focusing on sales and revenue, we’ve picked 7 that directly impact your bottom line:
1. Net promoter score (NPS)
NPS measures overall consumer satisfaction and brand loyalty by condensing both elements into one question: On a scale of 0-10, how likely are you to recommend our brand/product?
Think of it this way—NPS reveals how happy your audience is with what you offer. So, monitoring it consistently can help you deliver a better user experience and enhanced customer service and support. The result? Repeat business and an influx of new customers through recommendations.
Now, to calculate NPS, you only have to subtract the detractors from the promoters like this:
2. Customer satisfaction score (CSAT)
CSAT tracks client satisfaction with a specific purchase or brand interaction. More often than not, businesses use the Likert scale to gauge the initial user response here. For example, a CSAT survey may ask: How satisfied were you with Product X? Customers would answer by assigning a number from 1-7. Then, the final score would be calculated by using the formula below:
Granted, CSAT sounds exactly like NPS. However, the difference between them is straightforward. NPS tracks global client satisfaction. Meanwhile, CSAT evaluates how content your customers are with a particular experience.
3. Customer effort score (CES)
CES reflects the effort a customer makes to interact with your brand. This can be something like getting their query resolved by your service team or how difficult it was for them to use your products.
To understand this better, let’s take the example of an automated customer support chat. A typical CES inquiry at the end of such interactions would be: On a scale of 1-7, how easy did we make it to solve your issue?
That said, you’d want to deploy a CSAT survey and a CES questionnaire together. Still, that’s not a hard-and-fast rule. As for its calculation formula, here’s how it’s evaluated:
4. Feature usage
Feature usage monitors how often and in what ways users interact with a particular product feature. It consists of an entire subset of indicators. And while it may differ from one case to another, it usually includes markers such as:
- Total number of feature users
- Number of feature users against total number of product users
- Average session length of feature usage (per user)
- Time between instances of feature usage (per user)
As such, feature usage is one of the most prioritized SaaS customer engagement metrics since it pinpoints specific software functionality users want to see more of. More importantly, it helps companies make data-driven product development decisions.
5. Feature adoption rate
Feature adoption rate is a user activation metric that tracks how regularly clients use a particular software functionality in their daily operations.
Understandably, many confuse feature usage with feature adoption. However, feature usage monitors frequency, while feature adoption evaluates consistency. In other words, the former is a metric that influences the latter.
Now, with the rise of subscription-based software licensing, measuring feature adoption has become increasingly important. Since customers pay periodically in this model, new software functionality represents added potential value.
When that happens consistently, it boosts the customer’s perceived value of the product and influences their willingness to renew their subscription plan.
6. Churn rate analysis
Churn rate analysis refers to tracking a business’s average customer loss to minimize it. And while it can be done in real-time, it’s especially useful if you rely on a predictive model to anticipate it.
Even so, several data sources can indicate customer churn. These include, but are not limited to:
- Temporary account deactivation or closure
- Canceled subscriptions
- Non-renewals or suspended payments
It’s important to monitor your churn rate because it informs how you build a customer acquisition funnel.
Simply put, the higher your churn, the more customers you’ll need to acquire. That’ll eventually cut into your revenue and impact your bottom line, here’s how to calculate your churn rate:
7. Customer lifetime value (CLV)
CLV is the total revenue you can expect from a single client over time. It factors in purchasing frequency, average order volume/value, and the duration of the customer’s business relationship with your company.
So, say someone buys a cup of coffee worth $10 every week from their local coffeehouse. That goes on for five years until they move to a different city. Their CLV in that period would be roughly $2600.
Admittedly, your customer engagement model will directly influence your CLV. How? Let’s go back to the coffeehouse example.
Let’s assume the barista was routinely rude to the customer, or they frequently added extra sugar cubes to their order. Ultimately, the customer would find a new place to get their coffee. At that point, the taste of the coffee (product quality) wouldn’t even matter.
Strategies for successfully measuring customer engagement metrics
Monitoring customer engagement is all about establishing clear-cut objectives, consolidating data from multiple sources and effectively collecting and leveraging feedback. Here’s how it all plays out.
Setting clear objectives & goals
Effectively tracking client engagement metrics comes with a two-fold requirement. First, you must establish clearly defined objectives. Second, you must break those goals into quantifiable sub-categories and then align them with the metric you’ll pursue.
So, say you want to develop a customer appreciation strategy. Essentially, you’d like to thank your long-time clients for sticking with your company.
To achieve this, you’d have to:
- Train your support teams in quicker query resolution
- Leverage AI tools and resources to increase time-to-resolution
- Streamline your customer success strategy to reduce churn
- Introduce strategic product features to fit user preferences & accelerate time-to-value
All three elements above have a specific metric associated with them. For example, your CSAT and CES can tell you how successful you’ve been in speeding up query resolution time.
Meanwhile, your churn rate and NPS would shed light on the performance of your customer success plan. Finally, feature adoption and usage would reveal if customers derived value from recently added product functionality.
Utilizing multiple data sources for insights
A well-rounded customer engagement strategy will always avoid siloed information and leverage multiple data points to track business-critical outcomes. More importantly, it’ll include co-related actions that feed into each other.
Let’s take the example of a sales funnel to get a better picture here. One of the most common challenges in building and managing one is consistently generating qualified leads to push through the funnel.
An excellent way to sidestep this is to design high-performing referral programs that reward existing customers for bringing in new ones. In doing that, you automatically gain access to a new lead source that requires minimal oversight and supervision.
Similarly, user engagement data from your social channels—like using Facebook Conversions API for cookieless tracking, combined with online reviews, can offer a treasure trove of information regarding your product’s market perception. In some cases, it’ll even give you a pulse on how you’re faring in relation to your competitors.
Implementing effective feedback mechanisms
Implementing a solid feedback mechanism goes a long way in monitoring the metrics for customer engagement. Now, there are plenty of ways to do this. For example, if you’re running a SaaS platform, you could rely on:
- Real-time in-app or pop-up surveys
- Feature rating (users score app functionality based on their experience)
- Standardized CSAT and CES forms to measure overall client satisfaction
- Scheduled user interviews or video messages for in-depth product reviews
Note that all of these may not work in tandem with each other. So, if your primary offering is a project management platform, frequent pop-up surveys may negatively affect the user’s product perception.
Instead, it’d be better to opt for a discrete rating system that clients can interact with at their leisure. Quarterly surveys would also be a better alternative. The key here isn’t how you gather feedback but only that you do.
Tools & technologies for monitoring customer engagement
Like with most other data points, you’ve got several tools to accurately track client engagement metrics. The first among these is automated survey software. One prime example here would be Google Forms.
The good news is that you don’t necessarily have to build detailed questionnaires. In fact, the more you streamline your surveys to focus on specific elements, the better the quality of responses will be. And it’ll also result in higher completion rates.
The second option would be to leverage your in-house CRM database to assess customer information. This would help:
- Consolidate user data from different touchpoints
- Align multiple team processes (sales/marketing/etc) for holistic customer intelligence
- Identify at-risk clients to minimize churn rates
- Enhance lead management and nurturing for qualified prospects
However, you get the best of both worlds when you combine survey and CRM data through a dedicated analytics platform like ClicData. That way, you’d be able to eliminate silos (something that we talked about earlier) when monitoring customer engagement metrics.
For instance, you could analyze your buyers’ journey, right from their first interaction on your socials to becoming recurring customers. Better yet, connect your ticketing systems with online user reviews to quickly identify critical areas of improvement and make the necessary changes.
You see, the idea here is not just to consolidate all the customer engagement data you have in one space. It’s also to give you complete autonomy in how you analyze, leverage, and implement it to maximize your ROI.
Key takeaways on effectively utilizing customer engagement metrics
You know which customer engagement metrics can impact your sales. You also understand the best practices and strategies when it comes to monitoring those indicators. But if we had to leave you with a parting thought, it’d be this: Don’t disregard outliers.
For example, if niche survey responses don’t align with the global consumer sentiment, don’t just assume that the results are skewed due to temporary external factors. In most cases, it points to a crucial element that you may have overlooked.
Besides that, always rely on the right tools. Now, whether that’s your in-house CRM system, 3rd-party survey forms, or dedicated analytics software is entirely up to you.
💡 Customer Engagement FAQ:
What are customer and user engagement metrics?
Customer and user engagement metrics refer to specific data points that quantify and measure consumer interactions with a brand or product. This can include the customer’s overall satisfaction levels, preferences, product usage patterns, perceived product value…
What metrics should SaaS providers prioritize to monitor customer retention and engagement?
Product renewal rate, expansion revenue (from plan/tier upgrades), and activation rate (time between product awareness/trial and subscription) are three critical customer engagement and retention metrics for SaaS providers. Monthly recurring revenue is another crucial element here. There are several others but their suitability varies across cases.
How do you measure account activity?
A few core metrics for measuring global customer account activity include NPS, frequency of return users, average session length (for SaaS products), and support ticket volume. Note that these indicators vary across cases and may not apply to all brands or products.
Can customer engagement metrics be misleading?
In some cases, prioritizing specific engagement metrics over others can lead to skewed results. For example, prolonged sessions can often be due to a user’s inability to easily understand product features. So, exclusively tracking session length to monitor feature adoption in this instance would result in false positives.
Eduard Klein is an International Digital Growth Marketer, Blogger, and Entrepreneur with a global mindset. He guides through the process of starting and growing a digital business, and riding the wave of digital technology and marketing without getting swept away.