Measuring Engagement Metrics

In our Data School tutorial “Identifying Engagement Metrics”, we dive into the subject of customer success and dig further into the topic of customer engagement. Customer engagement is the process of actively building, maintaining, and managing relationships with customers in order to keep them coming back for more business. Investing in customer engagement is beneficial for increasing customer loyalty and gaining good advocates for your business.

Tracking engagement metrics is the best way to be invested in your customers and become more informed when it comes to making decisions about customer success initiatives. Many businesses look at overall engagement as a metric of success, but it’s necessary to go further into engagement itself. By breaking down customer engagement into individual metrics, you’ll learn quite a bit about your customers and their intentions or motivations. It’s recommended to closely examine several key metrics instead of overloading analysts with excessive information from every customer interaction.

In this tutorial, we’ll further discuss the metrics selected in our tutorial “Identifying Engagement Metrics” and go through what it takes to measure each one. We’ll also briefly talk about some software that’s helpful in measuring engagement metrics.

How to measure engagement metrics

As mentioned in the “Identifying Engagement Metrics” tutorial, we’ve identified a good mixture of marketing and service metrics to help you gain a comprehensive view of your business’s customer engagement. Each metric has a brief explanation as well as a description of how to measure it.

  • Activity Time – the total time someone spends actively using your product. To measure activity time, simply total up the time a user spends engaged with your product. Engagement should be predefined within your business to ensure you know when a user is active and when a user is inactive. Activity time contrasts with overall time spent, which measures how long users spend with your product rather than how long they actually engage with it.
  • Visitor Frequency – how often someone returns to your product. To measure visitor frequency, you need to keep track of how often unique visitors use your product within a certain time period. This can be measured on a daily, weekly, or even on a monthly basis. Most of the time businesses interested in visitor frequency are looking at web page interactions, and in this case, frequency is tracked by cookies.
  • Number of Core User Actions – a count of actions performed by users that are considered the basis of your product. Core actions should be predefined within your business to ensure you know when a user performs a core action. To measure the number of core actions, monitor a user’s activity over a period of time and make note of each time they perform a core action.
  • Number of Active Users – a count of the number of unique users that actively use your product, usually measured over a specific period of time. To determine whether a user is active or not, it’s important to define activity within your business. Once you’ve set a standard for being considered active, simply count the total number of people that meet your standard for active usage over a specific period of time.
  • Stickiness – a measure of how often your “regular” customers return during a period of time. To measure stickiness, you need to first define what makes a user regular. Then you need to monitor your regular users over a chosen period of time to see how many times they return to your product. Stickiness is generally measured as a ratio of daily active users to monthly active users.
  • Customer Retention Rate (CRR) – the percentage of customers your business is able to retain over a period of time. To measure overall CRR, three smaller measures are required:
    • Number of customers at the beginning of a period (B)
    • Number of customers at the end of a period (E)

Number of new customers in the period (N)
The goal here is to know the number of customers remaining at the end of the period without taking into account the number of new customers. The remaining customers can be calculated by subtracting N from E. Now, just divide that number by the total number of customers at the start (B) and multiply by 100 to get the overall rate.

Formula for CRR engagement metric.

  • Customer Lifetime Value (LTV) – the predicted revenue a customer will bring in over their contract lifetime. To measure overall LTV, two smaller measures are required:
    • Customer value- average order value multiplied by purchase frequency over a period of time
    • Customer’s average lifespan- average time a customer remains active before dropping off with your product

Simply multiply customer value and customer’s average lifespan to get customer LTV. While the formula        seems very straightforward, accurately calculating a customer’s lifespan is difficult. This is because there are many factors that influence a customer’s decision to stick with your product. In many cases, however, it’s feasible to use an estimated number in order to get a good idea of overall LTV.

  • Net Promoter Score (NPS) – a way to measure how likely a customer is to recommend your service to someone else. This metric focuses on asking customers a simple question, “On a scale of 1-10, how likely are you to recommend our business/product to another person?” Using a survey for all of your customers is a good way to measure NPS. For additional information on NPS, check out this tutorial.
  • No-Contact Rate – the percentage of customers who experienced issues with your product but did not try or gave up trying to contact you. Measuring no-contact rate involves reaching out to customers and getting feedback. A survey that asks customers about issues with your product and communication is a good way to measure no-contact rate.
  • Number of Customer Complaints – a count of complaints submitted by customers. To measure the number of customer complaints, you must first have a way for customers to submit complaints, whether it be a forum on your website, a periodic email asking for feedback, or a survey with a complaints section. Once customers are able to give complaints, simply make a count of each one you receive over a period of time.

Measurement tools

While it’s possible to calculate and keep up with your customer engagement metrics by hand, there’s a wide selection of software that can handle customer engagement for you. It’s no surprise that customer engagement looks different from product to product, so it’s important that you use a tool that will benefit your business the most. Choosing the right tools will involve more than side-by-side comparisons and depend highly on your product, but we’ve selected a few tools to highlight:

  • Totango: Enables businesses to align around their customers in order to increase loyalty and customer lifetime value. Totango connects all customer information so companies can strategically and intelligently engage with their customers to encourage adoption, retention, expansion, and referrals.
  • Astute Solutions: Designed to seamlessly connect businesses with their customers using leading-edge technology. Astute Solutions provides a string of platforms that make communication between businesses and customers enjoyable, insightful, and productive.
  • Intercom: Utilizes user intelligence and behavioral targeting to help businesses better understand, improve, and benefit from customer communication. Intercom gives you insights into who is using your product and provides tools to send personal communicators.
  • Genesys: Delivers seamless and consistent contact management solutions that enable businesses to engage customers across their journeys via multiple channels. Genesys ensures that clients get to interact with their customers on many touchpoints, allowing them to effortlessly deliver unparalleled customer support anytime.

Conclusion

Now that the value of customer engagement is recognized and you’ve identified methods of tracking it, it’s time to focus on measuring. Though there are many ways to track customer engagement, it’s important to understand what you’re tracking so that you know what you need to be measuring. There are several different software options available to make measuring engagement metrics easier and if you choose to use one, be sure it aligns with your product and overall business goals. After measuring your engagement metrics, it’s time to apply them to your business; learn how in this tutorial.

References

About Bryn Burns

Hi! I'm Bryn Burns. I am a current senior at Virginia Tech pursuing degrees in Statistics and Mathematics. Data science and visualization are two things I'm very passionate about, as well as working with numbers and helping people learn. I'm thrilled to share my knowledge here at The Data School!