For companies in the SaaS space, customer engagement is one of the most important aspects to drive success.
The longer you can keep a user engaged with your product and its features, the better!
The more interactions your SaaS company can garner, the higher your chances of increasing retention.
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This Article Contains
- Why Customer Engagement Is Important for SaaS Companies
- 7 Helpful SaaS Customer Engagement Best Practices
- 5 Essential SaaS Customer Engagement Metrics
- 3 Awesome SaaS Customer Engagement Tools
Why Customer Engagement Is Important for SaaS Companies
SaaS customer engagement refers to managing your SaaS platform’s interactions with your subscribers.
These interactions could refer to the number of times a user logs on to your product each week, the features most used by the subscriber base, and more.
The overarching goal of SaaS customer engagement is to help keep customers interested in the value of your software.
The longer you can keep them around, the better!
However, before looking at how to maximize customer engagement, you may wonder why your company should care about it.
After all, once a customer has paid for the product, that’s all that matters, right?
The sales cycle in the SaaS industry doesn’t end after product adoption and delivery.
Instead, products must be routinely updated and improved to create a solid base of recurring revenue from subscribers.
By driving customer engagement, using the strategies and practices below, you can create a bond between your users and the brand. This will make an existing customer less likely to switch to a competitor in the SaaS industry.
The more engaged customers you have who appreciate your service, the better your company’s reputation will be.
In a nutshell, an engagement strategy is vital because it increases customer retention and creates recurring revenue streams.
Now let’s look at how you can drive your SaaS customer engagement through the roof!
7 Helpful SaaS Customer Engagement Best Practices
These seven SaaS customer engagement practices will help you retain loyal customers:
1. Understand Your Customers
One of the biggest mistakes any SaaS business can make is treating customers as unknown, faceless entities. This happens often in the SaaS industry because companies rarely meet their software subscribers.
But this doesn’t mean you can’t understand your users in other ways!
Your company must engage with users to understand their customer journey, behaviors, wants, and needs.
To do this, you must communicate with your subscribers through surveys, reviews, and customer service. Even conduct interviews with focus groups to learn more about them whenever necessary.
You’ll also need to track essential user metrics and create customer segments.
Customer segmentation can help separate active users from dormant users.
How do you segment users?
By tracking product usage data.
Monitor user activity to draw patterns in your user base.
For example, people who log in several times a day are active users who you can nurture to become product advocates.
But if you notice a segment of users who barely ever engage with the app, it may be time to intervene by offering them proactive support, learning more about their needs and pain points, etc.
2. Embrace Customer Feedback
In the SaaS industry, customers drive product innovation.
Your customers’ needs will determine where your product can be improved or changed.
Collecting customer feedback through surveys and product reviews will help you understand what users want from your product.
Users will feel heard and confident about your product when you consider feedback and implement their desired changes.
3. Offer Rewards and Incentives to Customers
Incentives are a fantastic way to influence customer behavior.
Who doesn’t love free stuff, right? 🤑
High-value incentives like price reductions, access to additional features, and customer loyalty points for product usage can motivate customers to engage more!
Think of it like churn insurance. Each time someone thinks of leaving the product, give them a reason to come back for more.
4. Analyze Customer Engagement Metrics
Your customer engagement will remain abstract if you’re not measuring and analyzing it properly.
You need to understand how and why customers are engaging with your product.
There are many different types of user engagement SaaS metrics that you can analyze to understand how customers use your product, including:
- Activation Rate
- Feature Adoption Rate
- Daily or Monthly Active Users
- Customer Lifetime Value (CLV)
- Customer Churn Rate
- Net Promoter Score
These engagement metrics will help you understand what to focus on to increase long-term engagement.
If you’re keeping a keen eye on all product usage data, you may be able to pick up on details like:
- Average time spent on particular features or pages
- Average session duration
- Bounce rate
Soon, you’ll be able to establish patterns between broad metrics and actual behavior.
For example, a spike in feature adoption after sending in-app nudges and notifications could indicate a gap in the user’s feature knowledge. You could then use this information to craft a thorough product marketing strategy for the future.
5. Implement Live Chat Features
In a recent survey, 81% of customers reported that they needed more self-service options.
This is, of course, a win-win.
Once you deploy a comprehensive knowledge base and activate live chatbots, your support team can be directed to help out with more complex problems.
Unsure if these offer the same support as human support staff?
You’d be surprised.
AI-powered chatbots are taking the market by storm with their accuracy and success rate. Often, all they need to do is point people in the right direction in your comprehensive support portal.
And if it still doesn’t do the trick, chatbots can escalate things to a live agent; at this point your support team member will have all the data to resolve the query instantly.
AI to live agent workflow will keep things running smoothly for the user at all times.
6. Develop Engaging Content
Content marketing includes creating blogs, social media profiles, posts, and other Google search result-related media. In essence, an SEO strategy seeks to showcase your brand anytime someone Googles something about your field.
This lets users believe in and trust your brand even outside the product. It’s a great way to create brand awareness and get more people to engage with your software.
Moreover, a great SEO presence is a leading indicator for conversion too.
Want to learn how to get started with SEO for your SaaS product?
Get in touch with Startup Voyager! As a top-notch SEO agency, we know precisely how to outrank leading sites to improve your brand’s visibility!
7. Encourage User-Generated Content
Running a SaaS company is like managing one big family. 👪
From the SaaS sales team to product designers and even your customers, everyone plays a part in the success of your customer engagement strategy.
To make your users feel like they’re part of the community, encourage them to create content about your software and their customer journey with your company.
Blog posts, YouTube videos, social media posts, testimonials, reviews, and more, all act as social proof, which can help with customer acquisition alongside engagement.
It’s all about turning your users into product advocates.
So, now you know how to create an impactful SaaS customer engagement strategy.
But how do you measure actual customer success and engagement?
5 Essential SaaS Customer Engagement Metrics
SaaS user engagement metrics can measure the quantity, quality, and frequency of customer interaction.
Here are five essential customer engagement metrics that your company should track for improved product management and interaction:
1. Churn rate
No business ever wants customers to leave!
Since this is inevitable, however, businesses should measure how many customers decide to leave during set periods of time.
- What it is: Your churn rate measures the number of users that abandon your product during a fixed period.
- Why is it important: A drastic rise in churn rate could harm your company’s revenue stream. It’s vital to use churn numbers for decisions like quick pivots, new feature roll-outs, marketing maneuvers, etc.
- How to measure
|Churn rate = Number of churned customers during the period / Number of customers at the start of the period * 100|
- What type of company is this metric applicable for: Every SaaS company should measure churn rate. But it’s especially critical in fast-growth companies.
- How often you should measure it: A mature SaaS company should calculate the churn rate quarterly or annually. But a fast-growing company can measure it on a weekly or monthly basis too.
- Acceptable ranges: An acceptable churn rate for any SaaS company would be around 5 – 7% annually. However, this number largely differs based on the growth stage of the company, the industry, market trends, etc. B2B products tend to have a lower churn rate than B2C companies.
- Example: A company with 500 customers at the start of the period loses 50 by the end. Here’s what the churn rate calculation would look like:
(500/50)*100 = 10%.
2. Customer Lifetime Value (CLV):
Building a life-long relationship with your users?
Measuring CLV gives you a chance to measure this journey.
- What it is: Customer Lifetime Value is a user engagement metric that refers to the amount of money you can expect from the average customer during their lifetime as a subscriber.
- Why is it important: Besides forecasting revenue streams over a long term, CLV offers your team a chance to make many long-term decisions. For example, you could adjust your marketing spending for low CLV user segments and divert it to more high-value prospects.
- How to measure:
|Customer lifetime value = Average annual customer value / Average customer lifespan|
- What type of company is this metric applicable for: This metric is useful for any type of SaaS company. Enterprise-facing products and similar companies with stable revenue streams will derive more value from calculating CLV.
- How often you should measure it: CLV is typically a long-term metric and should be calculated quarterly or annually. However, make sure you leave enough room to adjust for customer churn or any changes in the pricing plans over that duration.
- Example: Let’s say your SaaS company has an average customer lifespan of six years with an average annual contract of $13,000. Your calculation to measure CLV would look like this:
$13,000*6 = $78,000
3. Daily/Weekly/Monthly Active Users
Measuring active users will tell you how many people have actual face time with your product.
- What it is: Active daily/weekly/monthly users measure unique customer log-ins into your product. This user engagement metric directly measures the most important aspect of your customer engagement model — actual product usage.
- Why is it important: Every other SaaS metric can be correlated with user activity. For example, you could observe a fall in a user’s log-in rate leading up to their eventual churn from the product. This way, a fall or rise in active users can predict your churn and retention rates.
- How to measure:
There’s no set technical formula since SaaS companies need to define what they deem an active user. But you could use this formula to calculate your daily active users:
|Total DAU = Unique users + Unique returning users|
- What company is this metric applicable for: Every B2C SaaS company must count its active users. However, B2B companies that are heavily invested in end-user engagement and satisfaction should also check in with their number of active users.
- How often you should measure it: This metric can be tracked on a daily, weekly, or monthly basis, depending on the specific user insights your company seeks to learn.
- Acceptable ranges: There isn’t an acceptable range for this metric, but generally, you want to see a steady increase in active users and log-ins over time. Depending on your product type, you could set different internal activity benchmarks for various stages of the user journey.
- Example: If you have 300 unique users on a given day and 150 returning users, your calculation will look like this:
(300+150) = 450 DAU
4. Net Promoter Score (NPS):
SaaS experts say the best way to measure product engagement is by simply asking. And NPS surveys will help you quantify this feedback.
- What it is: The NPS survey asks users how likely they’re to recommend your product to their friends — on a scale from 1 – 10. If a customer scores between 0 – 6, they are a “detractor.” If they score between 7 – 8, they are “passive users.” If they score between 9 – 10, they will likely be “promoters” for your software.
- Why is it important: NPS is a quick way to gauge customer loyalty and predict future engagement levels. Detractors in an NPS survey need attention and nurture to avoid churn. Your product team could use their feedback to improve the software.
- How to measure:
|NPS = % of promoters – % of detractors|
- What type of company is this metric applicable for: Companies like B2C businesses that rely on word-of-mouth publicity and user referrals should proactively track NPS.
- How often you should measure it: To get an accurate understanding of continuous customer satisfaction and health, it’s recommended that you measure your NPS every quarter.
- Acceptable ranges: The national benchmark survey done by SurveyMonkey shows that the average NPS score for technology companies is 35 and upward.
- Example: After a survey, the results show you have a promoter score of 45% and 6% detractors. Your NPS calculation would then be:
45 – 6 = 39.
5. Customer Effort Score:
Since SaaS businesses rarely interact directly with customers, you need to know how customers experience your product.
That’s what makes the Customer Effort Score (CES) an essential metric for SaaS businesses, as it shows how easy or difficult it is for users to interact with your business.
- What it is: CES measures how much effort customers need to put into using your product.
- Why is it important: Your CES offers valuable insight into the usability and customer experience. Additionally, it can help predict future purchase behavior because if users find it easy to use and your solution solves their issues easily, they’re more likely to repurchase or spend more on upgrades.
- How to measure: You’ll need to send out CES surveys with either emoticon ratings or the Likert scale that measures with ‘extremely easy’ to ‘extremely difficult’ ratings.
Then use that data and input it into this formula:
|Customer Effort Score = Sum of customer effort ratings / Total number of survey responses|
- What company is this metric applicable for: Companies relying heavily on customer referrals must pay extra attention to this metric as it can help predict referral likelihood. A high effort score for free trial products can also mean low conversions. Which is why free freemium products should track CES consistently.
- How often should you measure it: You should keep a close eye on this metric and calculate it weekly or monthly.
- Acceptable Ranges: There’s no acceptable range here – but you want to keep this score as low as possible.
Your company sent out a CES survey and received six responses that returned the following responses — 4,3,2,1,3,2
Your calculation would look like this:
(4+3+2+1+3+2) / 6 = 2.5
Now that you know how to implement your SaaS customer engagement strategy and measure some key engagement metrics, you may be thinking:
Are there any tools I can use to improve my customer engagement model?
Let’s take a look at three great SaaS customer engagement tools!
3 Awesome SaaS Customer Engagement Tools
A customer engagement tool aims to improve the relationship between customers and your SaaS business.
Some SaaS tools target engagement factors like customer onboarding, while others focus on engagement through improved customer service.
The three tools below all play a distinct role in increasing SaaS customer engagement:
Userpilot is one of the best all-in-one new customer engagement tools on the market. It lets you manage customer onboarding, long-term retention, customer success story collection, and more.
- 📈 Manage customer onboarding with engaging onboarding flows that require no code
- 📊 Collect user engagement data with NPS surveys to look into your customer experience and drive engagement metrics
- 👭 Group your users based on how they use your product and then compare their data
Userpilot offers paid plans that start from $249 per month.
- G2: 4.5/5 (204 reviews)
- Capterra: 4.6/5 (56 reviews)
Heap focuses on in-app customer behavior. Understanding how your users behave when using your product can help track where user engagement is most prominent.
- 👁️🗨️ Session replays allow you to see your product through the eyes of your users
- 🛤️ Track changes with insights into critical metrics available on dashboards
- 🧰 Easily integrate several tools and systems into one platform
Heap has several pricing plans starting with a free option.
- G2: 4.3/5 (911 reviews)
- Capterra: 4.5/5 (40 reviews)
LiveChat describes this app perfectly. It will help your company compress customer support communications into one accessible, easy-to-navigate platform.
- 📎 Share files, archive chats, and even rate chats with the chat tools available
- 🗃️ Access reports and analytics, like customer reports, data summaries, and more
- 🛠️ Customize your chat widgets, language, profiles, and other features
LiveChat has plans starting from $20 per month.
- G2: 4.5/5 (745 reviews)
- Capterra: 4.7/5 (1568 reviews)
Engage Customers to Catapult SaaS Success
You can use the practices, metrics, and tools above to drive your customer engagement through the roof and keep users engaged for a long time!
But what about getting customers in the first place?
This is where a SaaS marketing team like Startup Voyager can help you!
We’ll help you generate large amounts of traffic to your website through targeted SEO content techniques and optimization.
Growing organic traffic will ultimately lead to more customers for you to focus on keeping engaged!
So contact StartupVoyager today and connect with an SEO expert to skyrocket your organic traffic and create engaged customers!