Blog 93: Product engagement metrics: are our users engaged?
- Idea2Product2Business Team
- Aug 23, 2024
- 3 min read
Updated: Nov 18, 2024
In blog 34, we looked at the overall product management metrics that need to be continuously monitored and measured. 7 product metrics categories are revenue, costs, usage, reduction in usage, customer-satisfaction, profitability/value, roadmap progress. In this blog we will specifically look at product engagement metrics (a combination of usage and reduction in usage).
Product engagement: It tells us how well users are interacting with our product. More the interactions the better it is. As high engagement leads to retention and drives revenue.
By measuring product engagement, we can i) monitor user activity, ii) understand how the product is used, iii) identify activities for product-led growth (refer blog 71), iv) recognise product design gaps (refer blog 61).
A. Popular product engagement metrics:
Product engagement score (PES) help us understand how users interact with our product. A great tool to identify the extent of our user engagement.
It is a combination of 3 other metrics.
· Adoption rate: Average number of key events adopted by active visitors and users.
· Product stickiness rate: Average ratio of the number of DAUs (daily active users) to the number of WAUs (weekly active users) or MAUs (monthly active users).
· Growth rate: Ratio of new and renewed accounts or visitors to the number of churned accounts or visitors within a given period.
PES = [adoption + product stickiness + growth] / 3
Feature adoption rate. We track this by recording the number of times users have used a specific feature. A high adoption rate indicates a popular feature.
Feature adoption rate = [A feature’s total monthly active users / total number of logins or active users during the same duration] * 100
Product stickiness rate. Refers to users’ tendency to keep returning to our product because it solves a customer need. High product stickiness indicates opportunities to upsell, cross-sell (refer to blog 76 for more) and increase customer lifetime value.
Product stickiness rate = [daily active users / monthly active users]
Week 1 engagement: Measures user interactions with the product within the first week of signup/registration. Research shows that if a user is not engaging within the first week, they are likely to churn. There could be several reasons for not engaging, poor product experience, missing features, etc.
Time in product. Refers to the average session duration an active user spends with the product. If a user finds the product valuable, they will use it for a longer duration.
Retention rate. Refers to the percentage of customers who stick with the product. They keep renewing their subscription. High renewal rates keep customer acquisition costs low (refer blog 55 for more on customer acquisition costs).
Retention rate = [(number of paying users at the end of the time-period – number of users acquired during the time-period) / (total number of users at the beginning of the period)] * 100
Churn rate. Refers to the percentage of users that leave our business over a given timeframe. A high churn rate indicates low engagement rates.
Churn rate = [total number of users lost during a specific period / total number of users at the beginning of the period] * 100
B. Popular strategies to boost user engagement:
· Create interactive walkthroughs and onboarding checklists to guide users.
· Track in-app user engagement and create personalized flows.
· Segment customers based on engagement level to identify inactive customers (refer blog 92 for more on creating personalised experiences).
· Use gamification strategies to motivate users to come back. It usually includes an incentive to accomplish a goal (e.g. points, badges, leader boards, and discount coupons etc.).
· Build an in-app help centre to offer on-demand support.
Jump to blog 100 to refer to the overall product management mind map.
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All the best! 😊
