At it’s core, customer engagement score is a single metric that is used to measure how engaged your customers are. The metric is represented by a number based on customer activity and usage of your product or service — the higher the number the happier and more engaged the customer.
Together with customer satisfaction, customer engagement is one of the best churn predictors you can have. Actually there are three main reasons why you should care about customer engagement en behavior. Customer engagement score can help you:
- Identify customers in trials that are ready to purchase;
- Identify customers that need help or are about to churn;
- Identify customers that are appropriate for an upsell or cross-sell.
How do you measure customer engagement?
When we talk about customer engagement, it’s common to see people taking into consideration usage metrics only like visits, clickstream, pages per session, time on web site, etc. That kind of information is definitely useful and would differentiate a user that is using the product from a customer that isn’t, but there’s a better way of doing it.
An engaged customer is a customer that best gets the value out of your product or service — which means you can’t measure customer engagement by the level of utilization of your product. Think that someone may use your product but may not get the value/benefits of it.
“An engaged customer is a customer that best gets the value out of your product or service”.
The image you have a mobile app to help people get better at managing their own personal finances and that requires users to input all their bank transactions, purchases and etc.
Now imagine a customer that uses your product every single day, input data frequently — but is getting no better at managing his finances. She still can’t save any money and his debts are higher than ever.
That might be considered an engaged user of your app, but once she realizes she’s getting no benefit from it, she’s probably stopped using it.
Three steps to do it right:
1st: Make a list of the main benefits of your product/service
You probably already know that — If you don’t you’re probably in serious trouble. But this may be harder than you think. If you dig and go deep into the benefits your customers are getting from your product you’ll probably get to “increase revenue/make more money”. The point here is that you need to identify benefits that can be tracked with specific events, actions or results — and guess what, your customers’ revenue is probably not something you can track.
2nd: Prioritize those benefits and set a weight to each one of them
Your product/service is probably providing multiple benefits to your customers/users, but it’s important to track them separately — and in order of importance. To represent that, what we do is to define weight to each one of the events to be tracked. The higher the benefit, the higher the weight. You can think of a range of 1 to 10, or even 1 to 100, that’s completely up to you (just be aware that if you ever change the parameters the historical data can no longer be used to compare).
3rd: Compute the score
After preparing your application to track these events, you should finally compute the score. The score will be then used by sales and customer success teams to follow-up with your customers, and come up with multiple actions to retain the customer and increase the engagement.
Is there a formula?
Actually you can calculate the score however you want — and there are multiple ways of doing it, but there’s a simple and well know formula that might help you and be a very good start.
Customer Engagement Score = (w1*n1) + (w2 * n2) + … + (w# + n#)
Where w is the weight given to a random event and n is the number of times the event occurred.
Keep in mind that if you’re in the B2B SaaS space, your product is probably being used by multiple users of different profiles within the organizations. In that case might be good to keep track of the Customer Engagement Score by individuals, for a group of users (of different profiles) for the whole company.
The Customer Engagement score is definitely worth measuring. You can easily do this calculation by your own, but if you want more insights on your customer behavior, usage and engagement you can rely on awesome Customer Success platforms like Gainsight and Totango that will provide you with deep information about your customers with incredible capabilities such as: get a warning when an account a churn risk, identify which customers are falling behind in onboarding, highlight users that need more product training, identify your most engaged users, know if your executive champion has tuned out, identify accounts that are ready for an upgrade and more.