“The goal of a SaaS CEO should be to increase the profit they make from each customer (LTV), and lower the costs in sales and marketing that it takes to acquire each customer (CAC). Measuring Customer Engagement is a key tool that will help you achieve that goal, as it will allow you to increase your trial conversion rates, which directly reduces CAC. And it will help you lower your churn rates, which directly increases LTV.”

– David Skok


It’s all about quality over quantity as they say! Customer engagement is what drives sales for Software as a Service businesses. After all, unlike other business models, the key to Software as a Service is that you keep your customers coming back each month to renew their services.


The minute you stop engagement with your company and your product, the minute they cancel their subscription. The formula is pretty simple; engagement equals sales.


However, most Software as a Service companies are not taking the effort to properly quantify and measure engagement with their customers. This isn’t because of neglect. This is because it damn hard to quantify engagement.


What are Examples of Engagement Quantifiers?


Engagement can be measured by activities that users do on your software system and by the importance or relevance of those activities. For example, if you provide an accounting related software, the number of times that statistics are exported may be a signal of high importance.


By factoring in the relevance of the activity and the number of times these activities are performed, it is possible to get an indication of the level of engagement with your software. You may also divide up this engagement by measuring user engagement, account engagement, or even based on segmented traits.


Why Is It So Important to Start Measuring User Engagement?


There are a number of reasons to begin the process of quantifying and measuring engagement. Below are a list of five reasons why you should begin measuring and implementing some type of system for measuring engagement today.


1. Can’t Change What You Can’t See


Measuring your engagement is the first step in improving it. If you don’t have proper metrics in place to measure engagement you will never be sure how successful or unsuccessful your activities to improve upon engagement genuinely are.


First lesson, don’t underestimate the power of monitoring and evaluation. You cannot change what you cannot see.


2. Targeting Your Sales Activities


Don’t get caught up trying to cater to everybody. When you are investing your marketing, you want to make sure you are hitting the target audience that will be bringing in the most capital.


If you are measuring what activities are getting the most engagement, then you will be able to cater your services better towards your premium clients.


The Pareto principle indicates that 20% of effort results in 80% of yield. So focusing more on that 20% allows you to better capitalise on your efforts.


3. Use Engagement Metrics to Improve Your messaging


Engagement is a sign you are doing something right. By using metrics and analytics to power your strategy and decision making you will be setting yourself up for success.


Likewise, your messaging has a massive impact on conversions or sales. By testing and experimenting using analytics you now have the opportunity to find out what messaging within your software is improving the level of engagement that users have.


You may also wish to use the user-level engagement metrics to improve the level of personalisation with each customer. If you have a segment of your audience that are not very engaged, reach out to them using language that will appeal to them on an uninvasive platform like email.


If your customers are more engaged in your content then you may wish to amp up the level of engagement. You will know your customers better than anyone else. Therefore, whatever path you choose to take, at least you will be able to personalise the experience for them.


4. Use it as a Tool for Influencer Marketing


Influencer marketing is about finding advocates to push your product forward and bring in more of a crowd to your service. Who are these influencers though? How can you possibly find out?


That’ where engagement metrics yet again come in to save the day. Users with a higher level of engagement are most likely to spread the word about your business.


By researching your audience you are able to employ better and more targeted marketing tactics on a regular basis.


Use these tips and see your engagement rates sky rocket!