{"id":19485,"date":"2019-02-18T10:21:43","date_gmt":"2019-02-18T10:21:43","guid":{"rendered":"https:\/\/www.intercom.com\/blog\/?p=19485"},"modified":"2020-07-30T12:54:43","modified_gmt":"2020-07-30T11:54:43","slug":"product-engagement","status":"publish","type":"post","link":"https:\/\/www.intercom.com\/blog\/product-engagement\/","title":{"rendered":"Product engagement: the most important metric you aren\u2019t tracking for your SaaS business"},"content":{"rendered":"<p>If you have followed us over at <a href=\"https:\/\/www.sherlockscore.com\/\" target=\"_blank\" rel=\"noopener noreferrer\">Sherlock<\/a>, you will likely have heard us say many times that product engagement is the lifeblood of any SaaS business. This is because the entire SaaS business model is dependent on people using (and getting value from) your product consistently over time, otherwise they churn. The entire model is dependent on product engagement.<\/p>\n<p>In short, creating a method for scoring engagement is essential for every SaaS business. Without a proper way to score the product usage of your customers and accounts, it\u2019s pretty much impossible to know what the hell is going on with your business.<\/p>\n<ul>\n<li>As a Founder\/CEO, how many times have you asked, \u201cHow are our accounts doing?\u201d or \u201cHow\u2019s engagement this month?\u201d only to be faced with blank stares from your team.<\/li>\n<li>As VP of Product, how many times have you wondered if your recent releases were helping to drive overall engagement, only to realize that you don\u2019t have a good way of determining that?<\/li>\n<li>As a Customer Success Manager, how many times have you wanted an easy way to prioritize your day\u2019s work \u2013 an easy way to determine which accounts are thriving and which are struggling \u2013 only to give up and waste the day sending a bunch of random \u201c<a href=\"https:\/\/www.intercom.com\/blog\/end-just-checking-customers\/\" target=\"_blank\" rel=\"noopener noreferrer\">just checking in<\/a>\u201d emails?<\/li>\n<li>As an AE, how many times have you wished you could easily see which trial accounts are ready for a call and which ones you shouldn\u2019t bother with, only to give up and refresh your Facebook feed a few more times?<\/li>\n<\/ul>\n<p>Thankfully, all of these issues can be solved with a good product engagement scoring system. By scoring engagement, you can create essential visibility for every part of the organization that relies on it.<\/p>\n<p>Read on to learn the step-by-step process of creating a solid engagement score for your product.<\/p>\n<h2 id=\"what-is-product-engagement\"><strong>What is product engagement?<\/strong><\/h2>\n<p><span style=\"font-weight: 400;\">Product engagement measures how active users are with your product. One of the most common methods for measuring product engagement is by creating an engagement score, which defines engagement activities and tracks these activities over time. With this information, product managers can find ways to boost engagement. <\/span><\/p>\n<h2 id=\"four-steps-for-creating-an-engagement-score-for-your-saas-product\">Four steps for creating an engagement score for your SaaS product<\/h2>\n<h3>Step 1: Define engagement for your product<\/h3>\n<p>The first step in creating an engagement score is a strategic one. In this step, you need to think about what engagement specifically means for your product. Why? Because your product is unique.<\/p>\n<h4>Active vs engaged users<\/h4>\n<p>A quick note about active vs engaged users: they are not the same. <a href=\"http:\/\/twitter.com\/lincolnmurphy\" target=\"_blank\" rel=\"noopener noreferrer\">Lincoln Murphy<\/a>, one of my favorite SaaS thought-leaders, said it best:<\/p>\n<blockquote><p>\u201cVery often, I see people using the terms \u2018active\u2019 and \u2018engaged\u2019 interchangeably when talking about user engagement. I think this is a mistake. These terms are related \u2026 but do not mean the same thing.<\/p>\n<p>&nbsp;<\/p>\n<p>&#8220;You want &#8216;engaged&#8217; users \u2026 not just active users. A common definition for engagement for many SaaS apps is: number of logins. Seriously. This is a lot more common than I wish it were (I see it ALL THE TIME), but this is how a lot of SaaS providers measure \u2018engagement.\u2019 Logging in is a proxy for an active user, but it is certainly not engagement. Someone might login to your product to find the cancel button. Engaged users are those who are logging in and using the features that are driving value for him\/her.\u201d<\/p><\/blockquote>\n<p>We completely agree with this perspective. We don\u2019t believe in some universal definition of engagement that applies to all products. Each product is unique. Each product has its own nuances which define successful engagement. In short, it\u2019s important to specifically define \u200awhat it means for someone to be engaged with your product.<\/p>\n<blockquote class=\"pullquote-style-two\"><p>&#8220;Each product has its own nuances which define successful engagement&#8221;<\/p><\/blockquote>\n<p>For example, a B2B productivity tool could define engagement as a certain number of `projects created`, `tasks completed`, `team members added`, `comments left`, `files uploaded`, `projects completed`, etc.<\/p>\n<p>A social networking application could define engagement as `connections made`, `content posted`, `posts liked`, `comments made`, etc.<\/p>\n<p>The point is\u200a, your product <em>IS<\/em> unique. Don\u2019t run away from that fact. Embrace it and create an engagement model based on the important (and unique) activities that are important to your product, starting with the onboarding experience and going from there. Start with a list of engagement activities that a user can take in your product. For example:<\/p>\n<ul>\n<li>Logged in<\/li>\n<li>Added photo<\/li>\n<li>Shared photo<\/li>\n<li>Invited friend<\/li>\n<li>Commented on photo<\/li>\n<li>Edited photo<\/li>\n<li>Posted to Facebook<\/li>\n<li>Posted to Twitter<\/li>\n<li>Opened email<\/li>\n<li>Clicked on email<\/li>\n<\/ul>\n<p>You will be iterating and refining these criteria over time as your product evolves, but once you have the list, you can move on to step 2 \u2013 tracking these activities<\/p>\n<h3>Step 2: Start tracking these product activities (aka events)<\/h3>\n<p>I\u2019m assuming most SaaS product teams reading this are already tracking their important product events. But if you\u2019re not, what are you waiting for? Get yourself a <a href=\"https:\/\/segment.com\/\" target=\"_blank\" rel=\"noopener noreferrer\">Segment<\/a> account and get it done.<\/p>\n<p>Seriously. No excuses. Make it happen.<\/p>\n<p>I mean it. Why are you still reading this? Go! Get it done. Then move to Step 3.<\/p>\n<h3>Step 3: Weigh each \u201cengagement\u201d event<\/h3>\n<p>Now that you are tracking your important engagement events, the next step is to weigh each event based on its impact, or its importance, to overall customer engagement with your product. This is an essential step due to one simple fact:<\/p>\n<p><strong>Not all activity is created equal.<\/strong><\/p>\n<p>Think about it: the act of inviting a new user to your product is a more engaging act than simply logging in. Writing a long post on a social media site is more engaging than simply liking a post. Creating a project on a <a href=\"https:\/\/monday.com\/s\/task-management-software\" target=\"_blank\" rel=\"noopener noreferrer\">task management application<\/a> is more engaging than simply completing a single task. And so on.<\/p>\n<p>So you need to weigh these activities accordingly. Create a table that looks like the one below. List your engagement events on the left column and weigh each event on the right, like so:<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-19521\" src=\"https:\/\/www.intercom.com\/blog\/wp-content\/uploads\/2019\/02\/image_preview-1.png\" alt=\"\" width=\"786\" height=\"247\" srcset=\"https:\/\/www.intercom.com\/blog\/wp-content\/uploads\/2019\/02\/image_preview-1.png 786w, https:\/\/www.intercom.com\/blog\/wp-content\/uploads\/2019\/02\/image_preview-1-300x94.png 300w, https:\/\/www.intercom.com\/blog\/wp-content\/uploads\/2019\/02\/image_preview-1-768x241.png 768w, https:\/\/www.intercom.com\/blog\/wp-content\/uploads\/2019\/02\/image_preview-1-700x220.png 700w, https:\/\/www.intercom.com\/blog\/wp-content\/uploads\/2019\/02\/image_preview-1-600x189.png 600w\" sizes=\"auto, (max-width: 786px) 100vw, 786px\" \/><\/p>\n<p>You can choose to have a score range of 1\u201310, 1\u2013100, 1\u20131000, whatever you prefer. The point is, you should give each event a point value that is in line with its value to overall engagement. As a general rule, common, higher-frequency events should have lower point values. Less common, lower-frequency events\u200a \u2013 those used by \u201cpower users\u201d\u200a \u2013 should have higher values.<\/p>\n<p>Then, for each one of your users, you should add a column for the number of times they triggered each event over a period of time (for example, the past seven days):<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-19520\" src=\"https:\/\/www.intercom.com\/blog\/wp-content\/uploads\/2019\/02\/image_preview-2.png\" alt=\"\" width=\"785\" height=\"253\" srcset=\"https:\/\/www.intercom.com\/blog\/wp-content\/uploads\/2019\/02\/image_preview-2.png 785w, https:\/\/www.intercom.com\/blog\/wp-content\/uploads\/2019\/02\/image_preview-2-300x97.png 300w, https:\/\/www.intercom.com\/blog\/wp-content\/uploads\/2019\/02\/image_preview-2-768x248.png 768w, https:\/\/www.intercom.com\/blog\/wp-content\/uploads\/2019\/02\/image_preview-2-700x226.png 700w, https:\/\/www.intercom.com\/blog\/wp-content\/uploads\/2019\/02\/image_preview-2-600x193.png 600w\" sizes=\"auto, (max-width: 785px) 100vw, 785px\" \/><\/p>\n<p>Next, simply multiply the event weight by the number of events. Your result should look something like this:<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-19519\" src=\"https:\/\/www.intercom.com\/blog\/wp-content\/uploads\/2019\/02\/image_preview-3.png\" alt=\"\" width=\"774\" height=\"245\" srcset=\"https:\/\/www.intercom.com\/blog\/wp-content\/uploads\/2019\/02\/image_preview-3.png 774w, https:\/\/www.intercom.com\/blog\/wp-content\/uploads\/2019\/02\/image_preview-3-300x95.png 300w, https:\/\/www.intercom.com\/blog\/wp-content\/uploads\/2019\/02\/image_preview-3-768x243.png 768w, https:\/\/www.intercom.com\/blog\/wp-content\/uploads\/2019\/02\/image_preview-3-700x222.png 700w, https:\/\/www.intercom.com\/blog\/wp-content\/uploads\/2019\/02\/image_preview-3-600x190.png 600w\" sizes=\"auto, (max-width: 774px) 100vw, 774px\" \/><br \/>\nThe total of all your individual event values will give you a total engagement score for an individual user.<\/p>\n<p>Finally, just run this calculation for each one of your users and you will have the basis for a quantified <a href=\"https:\/\/www.intercom.com\/blog\/ways-to-increase-user-engagement\/\" target=\"_blank\" rel=\"noopener noreferrer\">user engagement<\/a> score.<\/p>\n<p><img decoding=\"async\" src=\"https:\/\/www.intercom.com\/blog\/wp-content\/uploads\/2019\/02\/image_preview-1.gif\" alt=\"\" \/><\/p>\n<p>But don\u2019t stop there. The next step is to give it all some meaning.<\/p>\n<h3>Step 4: Give it context by normalizing raw scores<\/h3>\n<p>If you are going to go through the exercise of creating an engagement score, it\u2019s essential that it is something that can be used across your organization. This is a metric that needs to be \u201coperationalized\u201d by your various teams. This means that your score needs to be in a format that is easily understood and consumed by anyone.<\/p>\n<p>Simply telling your marketing team that a user has a score of 458 isn\u2019t very helpful. How are they supposed to know if 458 is a good score or a bad score? Is that high or low?<\/p>\n<p>But telling them that a user has a score of 91 on a scale between 1-100 is something they can easily understand.<\/p>\n<p>This is why you need to apply a normalization formula to your raw engagement scores. In <a href=\"https:\/\/www.sherlockscore.com\/\" target=\"_blank\" rel=\"noopener noreferrer\">Sherlock<\/a>, in order to normalize scores, we use a process called <a href=\"https:\/\/en.wikipedia.org\/wiki\/Winsorizing\" target=\"_blank\" rel=\"noopener noreferrer\">Winsorizing<\/a> and then apply an exponential function to ensure that differences in the raw scores are more effectively represented.<\/p>\n<h3>Step 5: Apply the scores to make them actionable<\/h3>\n<p>Once you have a normalized set of user scores, you have done the hard work. All that is left is using these scores in ways that have direct business application. Here are a few ways to make this scoring model applicable and actionable:<\/p>\n<h4>1. Rank your users<\/h4>\n<p>When every one of your users has an engagement score, that gives you the opportunity to do something amazing:\u200a actually rank your users based on their engagement. And this opens up so many opportunities. For example, you can:<\/p>\n<ul>\n<li>Discover your power users and find out what makes them great.<\/li>\n<li>Prioritize customer success efforts to drive great support, identify problem users and growth opportunities.<\/li>\n<li>Drive more personalized marketing programs.<\/li>\n<li>Identify great user research targets.<\/li>\n<\/ul>\n<p>This kind of user ranking can help you understand your users in the context of their actual engagement with your product\u200a \u2013 incredibly powerful!<\/p>\n<h4>2. Score and rank your accounts<\/h4>\n<p>With all your users scored for engagement, you can then aggregate those scores at the account level (which is essential for any SaaS company). As you can imagine, being able to rank your accounts will allow you to:<\/p>\n<ul>\n<li>Understand the overall health of your business.<\/li>\n<li>Prioritize sales efforts by knowing which trial\/freemium accounts are more likely to convert.<\/li>\n<li>Prioritize CS efforts by focusing on accounts that are ripe for expansion and those needing some extra support.<\/li>\n<li>Identify which features are most important to your best accounts and measure the performance of new features as well.<\/li>\n<\/ul>\n<h4>3. Calculate overall score for your product<\/h4>\n<p>By calculating a score for each one of your users, you can also aggregate those scores to create an engagement score for your product as a whole.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-19518\" src=\"https:\/\/www.intercom.com\/blog\/wp-content\/uploads\/2019\/02\/image_preview-4.png\" alt=\"\" width=\"799\" height=\"370\" srcset=\"https:\/\/www.intercom.com\/blog\/wp-content\/uploads\/2019\/02\/image_preview-4.png 799w, https:\/\/www.intercom.com\/blog\/wp-content\/uploads\/2019\/02\/image_preview-4-300x139.png 300w, https:\/\/www.intercom.com\/blog\/wp-content\/uploads\/2019\/02\/image_preview-4-768x356.png 768w, https:\/\/www.intercom.com\/blog\/wp-content\/uploads\/2019\/02\/image_preview-4-700x324.png 700w, https:\/\/www.intercom.com\/blog\/wp-content\/uploads\/2019\/02\/image_preview-4-600x278.png 600w\" sizes=\"auto, (max-width: 799px) 100vw, 799px\" \/><\/p>\n<p>By tracking this average score over time, you can determine whether or not the work you are doing on your product is actually driving engagement. You also might be able to make some board-level decisions about when to (or whether to) make further investments in the business.<\/p>\n<h4>4. Compare populations or cohorts<\/h4>\n<p>A user engagement metric becomes tremendously helpful when comparing different populations of users. You can compare the engagement of new users vs. older users, users on a free plan vs. those on a paid plan, users with different access-levels, etc.<\/p>\n<p>The opportunities to gain insights by comparing engagement across segments are endless.<\/p>\n<h4>5. Correlate with other business metrics<\/h4>\n<blockquote class=\"pullquote-style-three\"><p>&#8220;Product engagement is an essential metric\u200a \u200afor any software business&#8221;<\/p><\/blockquote>\n<p>Ultimately, a good user engagement score isn\u2019t simply a valuable product metric \u2013 it\u2019s an essential business metric\u200a \u200afor any software business. Comparing the levels of user engagement to other business metrics\u200a\u2014\u200alike sales, retention, growth, LTV, NPS, etc \u2014 is a great way to ultimately predict and forecast business progress based on engagement levels.<\/p>\n<p>And if you don\u2019t think user engagement is tied to the value of your business, think again. In 2016, <a href=\"https:\/\/www.vanityfair.com\/news\/2016\/04\/morgan-stanley-downgrades-twitter\" target=\"_blank\" rel=\"noopener noreferrer\">it cost Twitter over $1B in market cap.<\/a><\/p>\n<h2 id=\"keep-improving\">Keep improving<\/h2>\n<p>Peter Drucker is famous for saying: &#8220;You can\u2019t manage what you don\u2019t measure.\u201d<\/p>\n<p>If product engagement is an absolute key to success for your software business, then you simply must have a way to measure it, from onboarding to the later stages of the customer lifecycle. You aren\u2019t going to be able to improve it unless you do.<\/p>\n<p>Of course, building this system yourself is NOT an easy task! We built <a href=\"https:\/\/www.sherlockscore.com\/\" target=\"_blank\" rel=\"noopener noreferrer\">Sherlock<\/a> to not only help teams easily create these engagement models, but to help them operationalize engagement as well. For example, with our <a href=\"https:\/\/www.sherlockscore.com\/blog\/sherlock-integration-intercom\/\" target=\"_blank\" rel=\"noopener noreferrer\">Intercom integration<\/a>, you can ship user and account scores to your Intercom account, allowing your CS and marketing teams to use that data when segmenting users or triggering messages. We\u2019d love for you to check it out.<\/p>\n<p>Whether you decide to use Sherlock or do it yourself, we hope this post offers a framework and helps your team get a quantitative handle on engagement.<\/p>\n\n","protected":false},"excerpt":{"rendered":"<p>The entire SaaS business model is dependent on people using your product consistently over time. Here&#8217;s how you can measure and score engagement for your product.<\/p>\n","protected":false},"author":387,"featured_media":19489,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"category":[5],"tags":[88,150,62],"coauthors":[14885],"class_list":["post-19485","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-product-and-design","tag-churn","tag-engagement","tag-product-management"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.3 (Yoast SEO v27.3) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Product Engagement: Determine How Active Your Users Are<\/title>\n<meta name=\"description\" content=\"Active and engaged users are the foundation of every successful SaaS company. 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