Product Engagement: What Is It And How to Increase It In SaaS
Whether you want to boost user activation or improve product adoption, maximizing product engagement is crucial. It’s the key to retaining active users and helping them generate maximum value from your SaaS product.
But here’s the thing—product engagement can mean different things for various products. It’s not just a measure of how often people use your product.
That makes it key to understand what product engagement means for your specific offering to track and optimize the right metrics.
In this article, we’ll take a closer look at what product engagement is and how you can measure it. We’ll also discuss a few ways to improve engagement for SaaS products. Let’s dive right in.
Product engagement (short summary)
- Product engagement is the level of engagement with which users interact and stay involved with a product. Increasing engagement is crucial to helping users find value in your product.
- Tracking customer engagement for your SaaS product offers several benefits, including reduced user friction and improved conversion and retention rates. It also helps outline a data-driven roadmap to improve your product.
- An engaged user base looks different for various products. You can measure engagement by tracking key metrics such as product engagement score, active users, product stickiness, feature adoption rate, average session duration, and customer retention.
- Measuring product engagement involves several steps, such as selecting relevant metrics, generating product analytics reports, collecting user feedback through surveys, and improving the user experience based on these findings.
- You can improve product engagement by implementing personalized in-app experiences, promoting new features through a continuous onboarding process, and offering self-service support.
- Book a Userpilot demo to learn how it can help you track product engagement through various analytics reports and implement tailored in-app experiences based on these insights.
What is product engagement?
Product engagement is a measure of the extent to which users interact with a product. You can measure product engagement using metrics such as average session duration, customer retention rate, product stickiness, and active users.
Tracking and improving product engagement is crucial to driving growth for SaaS products. It can help you determine whether users are deriving the desired value from your product. Also, you can get insights into problem areas within the user experience that cause churn. This can help improve user activation and conversion rates.
Why is it important to track user engagement?
When it comes to the entire SaaS business model, measuring user engagement offers the following benefits:
- Reduce friction from the user experience – Monitoring how users interact with your product helps pinpoint areas of low engagement. That means you can identify and remove points of friction that cause users to churn.
- Improve free trial to paid conversion – You can take steps to ensure free trial users get maximum value from your product. It helps convert them into paid users and amplify revenue.
- Increase retention rates – If users interact with your product often and get more value from it, you’ll have an easier time retaining them.
- Implement data-driven roadmaps – Monitoring user engagement helps you identify features that generate traction. You can double down on those data-driven insights to develop and launch related features to drive engagement further.
Metrics for measuring product engagement
Product engagement doesn’t just track how often people use your product. Instead, it’s an indication of how well users interact with it and accomplish their desired tasks. If you’re looking to measure and improve product engagement, the following metrics will come in handy:
Product engagement score
Product engagement score is a quantitative measure of how engaged users are with your product. You can use this formula to calculate the product engagement score:
Product engagement score (PES) = (Adoption rate + Stickiness rate + Growth rate) / 3
The product engagement metrics involved include:
- Adoption rate – The average number of core events adopted by active visitors/users divided by the total number of such events. It indicates how many of the available features users engage with.
- Stickiness rate – This is calculated by dividing the number of daily active users (DAUs) by the number of weekly active users (WAUs) or monthly active users (MAUs). It indicates the rate at which users return to your product.
- Growth rate – It’s calculated by dividing the number of new users and renewed accounts by the churned accounts/users in a given timeframe. This helps you measure how paid usage of your product has changed over time.
Active users
The number of active users measures how many people regularly engage with your product. Tracking daily, weekly, or monthly active users offers insights into several aspects of product growth, including free-to-paid conversions, retention, and stickiness.
You can choose from the following product engagement metrics:
- Daily active users (DAU) – measures the number of engaged users who have at least one session or perform a specific action in a 24-hour period.
- Weekly active users (WAU) – tracks the number of users who log into your product and engage with it at least once in a 7-day period.
- Monthly active users (MAU) – measures the number of users who perform a specific action at least once in a 30-day period.
The decision to track DAU, WAU, or MAU depends on how frequently you want users to engage with your app. For instance, if you’re building a social media scheduling tool, it makes sense to measure DAU. On the other hand, MAU would be a more suitable metric for a budgeting or banking app.
Product stickiness
Product stickiness is a measure of how willing users are to return to your product. A higher stickiness metric indicates that people find your product helpful and valuable.
You can measure product stickiness using the DAU/MAU ratio in a given period. Here’s the formula:
Stickiness metric = Daily active users (DAU) / Monthly active users (MAU)
Feature adoption rate
Feature adoption rate is an indicator of how users engage with a specific feature. A high feature adoption rate indicates that the feature is popular and offers value to users.
On the other hand, a low adoption rate could indicate that the feature is difficult to use or doesn’t offer any help to users. Feature adoption rate also plays a key role in measuring product adoption.
Here’s how you can calculate the feature adoption rate:
Feature adoption rate = (MAU for a specific feature / Total number of user logins in the given period) x 100
Average session duration
The average session duration helps evaluate how much time active users spend with your product. A longer average session duration is a sign of higher user engagement. It indicates that people enjoy using your product, which means it helps them accomplish their goals. On the other hand, a low average session duration could be a sign of friction in the user journey.
You can calculate the average session duration using the following formula:
Average session duration = Total time spent across sessions / Total number of sessions
Customer retention rate
The customer retention rate is one of the most crucial product engagement metrics. It measures the percentage of users who keep returning to your product, renew their subscriptions, and actively interact with your product in a given period. A higher retention rate means people perceive your product as valuable and will likely turn into loyal users.
Here’s how you can calculate the retention rate:
User retention rate = [(Total number of paying users at the end of the period – Total number of users acquired during the period) / Total number of users at the start of the period] x 100
How to measure product engagement in SaaS
If you want to build a product that generates steady revenue and attracts a loyal user base, tracking product engagement is non-negotiable. While there isn’t a one-size-fits-all formula to measure product engagement, the following steps will help you get started:
1. Define engagement criteria for your product
First things first—it’s important to understand that the definition of engagement varies from product to product. For instance, a food delivery app with good engagement would look like users ordering every second day from the app.
In the case of a social media scheduling tool, engaged users would likely schedule four or five posts every week. On the other hand, for a budgeting tool, users would return once or twice a month to set and track their monthly budgets.
That makes it crucial to understand what “good engagement” means for your product and focus on the most relevant metrics.
2. Choose the product engagement metrics to track
Next, it’s time to select metrics that help define engagement for your app. Choose metrics that help you track different aspects of engagement, including:
- Product usage – Metrics like daily active users (DAU), monthly active users (MAU), and average session duration can help you understand how the overall product is being used.
- Feature utilization – Besides feature adoption rate, you can also track feature clicks or events to determine how frequently users engage with a specific feature. You can use this data to inform future product development decisions.
- Retention – User retention rate is the most obvious choice for assessing how good your product is at making users stay. However, you can use other metrics, such as churn rate and lifetime value (LTV), for deeper insight into retention.
- Conversion – You can monitor conversion rates at different points in the user journey. For instance, you can track conversion rates during onboarding, post-free trial, or promotional offers.
3. Measure product engagement with analytics reports
This is where you collect and analyze data on in-app user behavior and interactions. A product growth tool like Userpilot with built-in analytics features comes in handy here.
Analytics reports such as feature usage, trend analysis, and heatmaps help gauge product engagement levels. You can assess user interactions across different features/events and identify areas with high and low product engagement.
Also, consider using reports like funnel and path analysis for a closer look into how users navigate your product. It’ll help you identify drop-off points in the user journey.
You can use insights from these reports to dig deeper into in-app user activity. This will help you spot behavior patterns and trends, which, in turn, will come in handy for improving product engagement.
4. Utilize feedback surveys to understand user behavior
Product analytics reports are an excellent tool for understanding how users interact with your product. But if you want to drill down into why they behave the way they do, it’s a good idea to collect user feedback with in-app surveys.
Launch in-app surveys at the right points in the user’s journey, such as when they complete a series of tasks. You can also trigger a survey near the end of the trial period to understand what would motivate them to convert into paid users.
When creating in-app surveys, make sure you use a mix of close-ended and open-ended questions to get more in-depth insights from users.
5. Continuously monitor engagement and enhance user experience
It’s worth keeping in mind that optimizing product engagement in SaaS isn’t a set-and-forget process. Your product must adapt to changing user needs and preferences. That means you must track engagement periodically to identify areas of improvement.
Consider setting product engagement benchmarks to determine whether your efforts are headed in the right direction.
Also, use insights from various analytics reports to create hypotheses of what can improve user engagement. Next, implement strategies based on these hypotheses and run A/B tests to validate them. Make this an iterative process to ensure continuous improvement in the user experience.
Best practices for improving product engagement
In this section, we’ll outline a few tactics to maximize engagement for your SaaS product. Let’s take a look.
1. Create personalized in-app experiences
Personalized user experience is often the key to successful products. It helps hook users from the get-go and makes them feel valued, driving greater engagement. However, personalization in SaaS involves more than just addressing a user by their first name every time they log in.
Instead, it’s about tailoring every aspect of the user journey, from content and feature recommendations to in-app messages.
All this needs a lot of user data. Start collecting it with welcome surveys to understand their personas and use cases. Next, introduce them to relevant features and tools based on their specific use case. Similarly, craft personalized in-app messages that cater to their pain points and queries.
2. Improve app engagement with product walkthroughs
You could build the most aesthetic app, but it’ll struggle to drive engagement if people can’t figure out how to use it. You have to implement suitable measures to help users navigate your product and reach the Aha! moment sooner rather than later.
That makes it crucial to use in-app onboarding flows to guide new and existing users through your product.
Design in-app walkthroughs to help them get started and understand what your key features can do. This will help users understand the steps they should take on any given page. Consequently, you’re able to flatten the learning curve and avoid overwhelming new users, leading to improved user activation and product adoption.
3. Promote new features with continuous onboarding
Building a SaaS product means you have to launch new features regularly to keep up with shifting user needs. However, releasing new features won’t help much unless you can drive adoption through continuous onboarding.
Start by announcing new feature releases through in-app messages and notifications. Include a clear call-to-action (CTA) that spells out what to do next. Design an in-app flow to guide users through the new feature, outlining key steps and use cases. This will allow users to get more value from your product.
4. Perform A/B tests to improve customer engagement
Product analytics reports make it easier to predict what will strike a chord with users, but it’s still difficult to know for sure. This makes it crucial to experiment with different variations of the user experience to identify the one that drives maximum engagement. That’s where A/B testing comes in.
You can choose from different types of A/B tests, such as:
- Controlled A/B test – Compares engagement for a group of users that sees a flow and another that doesn’t go through it.
- Head-to-head A/B test – Compares engagement for two user groups, where each group goes through a different variation of the flow.
- Multivariate test – Involves testing variations of different variables simultaneously to determine the best-forming combination. It’s more suitable for products with larger user bases.
5. Offer self-service support with a resource center
Here’s the thing. Users don’t want to message customer support every time they encounter a problem. They want the option to troubleshoot errors on their own and find quick answers to their queries. This makes it crucial to provide them with self-service support.
While there are several ways to deliver self-service support, an in-app resource center works well for SaaS products. Start by building a knowledge base of articles that address common user problems and queries. Include in-depth tutorials and guides to help new users get the hang of your platform. Additionally, be sure to provide users with an option to contact customer success teams when required.
6. Use gamification to hook your users
Adding elements of gamification to the user experience is an effective way of increasing engagement. When done right, gamification provides users with instant gratification and makes them look forward to using your product. It creates a habit and motivates them to continue performing key actions.
So, how does it work? Reward users for performing in-app actions or events, such as trying a new feature or taking a survey. The reward can be as simple as an animation congratulating them for saving their first project and as big as a free month with your app.
Best tools for measuring and improving product engagement
Optimizing product engagement involves several aspects, from setting and tracking the right metrics to implementing in-app onboarding experiences. Here’s our pick of the best tools for tracking and improving product engagement:
1. Userpilot – Best for tracking and improving in-app engagement
Userpilot is a product growth platform that comes with powerful product analytics. You can also create and implement personalized in-app flows to increase engagement and improve the user experience.
Key features include:
- In-app engagement flows – Create in-app walkthroughs for new and existing users to guide them through various features and tools. It helps them navigate your product with ease.
- Checklists – Create onboarding checklists to walk new users through key activation steps and help them find value in your product.
- Resource center – Build an in-app resource center that gives users quick access to knowledge base articles, guides, and other resources and offers self-service support.
- Analytics reports – Access a broad spectrum of reports, from trend analysis and funnel analysis to cohort analysis, path analysis, and heatmaps. Use insights from these to better understand users and improve their experience.
- Analytics dashboard – Set up and use multiple dashboards to track product and feature engagement. For instance, the product usage dashboard lets you monitor trend reports and active users in one place.
2. Amplitude – Best for tracking mobile app engagement
Amplitude is a powerful product analytics and event-tracking platform that caters to the needs of new-age product and growth teams.
Key features that help improve product engagement include:
- Advanced, cross-platform product analytics.
- Event segmentation.
- A/B testing.
- User cohorts.
- Retention analysis.
- Funnel analysis.
3. Google Analytics – Best for tracking website engagement
Google Analytics is one of the most widely used tools for tracking website traffic and engagement. With GA4, you get new features like event-based data and predictive capabilities.
When it comes to improving user engagement, Google Analytics offers the following features:
- User journey analysis through user paths, funnel visualizations, and cohort analysis.
- Dynamic segmentation based on event data and user properties.
- Predictive metrics, such as churn probability, purchase probabilities, trends, and anomalies.
Conclusion
Every successful SaaS product thrives on an engaged user base. You can improve product engagement by personalizing the user experience with in-app flows and messages tailored to each user’s needs. Also, use product analytics reports to monitor in-app user behavior and adapt your product according to their changing demands.
Ready to take your SaaS product’s engagement levels up a notch? Schedule a Userpilot demo now to get started.
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