What is Customer Engagement?
Before we begin, let’s get it clear what customer engagement really is. Customer engagement (also known as user engagement) is the measure of your audience or your customers’ engagement with the content you are producing. This is measured by evaluating customer engagement metrics both on your website and across your social media (as well as wherever else you are publishing your content). It is predicated on the amount of views, likes, comments, shares, favourites, hearts, that your content receives, taking into account their importance (we will get to this).
But why are customer engagement metrics so important? Used in conjunction with customer satisfaction metrics, they will give you a solid foundations to calculate your churn rate. In terms of immediate benefits, calculating your user engagement score will also help you identify the following:
Customers ready to purchase
Customers in need of help
Those that are about to churn
Those that will make purchases based on up-selling or cross-selling
How do you use your customer engagement metrics to achieve this? Let’s find out…
User Engagement Metrics: Active Users
What Is An Active User?
As above, let’s clarify what we mean before we get stuck into the meat. For many businesses an active user will be defined by one that is ‘logged in’. However, this can be slightly misleading. A user simply being logged in doesn’t in and of itself generate more leads, increase sales or very much else. Instead you need to define ‘active’ by the actual actions they are taking, and how this equates to a desired result for your business.
This desired result could be practically anything, but will more than likely, especially in eCommerce, refer to one of the following:
Discount Code Used
Daily, Weekly & Monthly Active Users
Many marketers will use the amount of daily, weekly or monthly active users (often abbreviated to DAU, WAU & MAU) as an indication of customer engagement. However, there are also many marketers out there who will call these ‘vanity metrics’ with no real value to your business. Simply explaining to your MD that you have 40,000 MAUs might sound great, but what does that really say? Unless you are selling advertising; practically nothing if it doesn’t equate to a sale or some other ‘desired result’.
Instead, what is valuable when looking at your DAUs, WAUs & MAUs are the comparisons from one to the other. And comparing our DAUs with your MAUs will give you the ability to quantify the stickiness of your content by calculating the monthly user return ratio.
Calculating Monthly User Return Ratio
MAU/DAU = Monthly User Return Ratio
Rather simply, by dividing your monthly active users by your daily active users you will get an understanding of how many are actually returning to and using your website/application. Whilst not a concrete figure, this will help you understand how ‘sticky’ your content is, or how functional your application is.
Benchmarking The Return Ratio
To get an understanding of what improves your return ratio, you should be benchmarking your monthly (or preferably quarterly) results against:
Changes in design to your website/application.
Additions to your website’s content.
Every time you do this, check if your ratio is increasing or decreasing and investigate why. Is the content information rich? Has a bug developed on the site? Diagnose and redesign.
Customer Engagement Metrics: Activity Time
Leading on from active users, let’s take a look at the activity time metric. This is the average amount of time the user actively spends on your website/a specific webpage/your application. This metric does not include the amount of time that users have your website open in a separate tab, or are logged in.
Σ time / Σ sessions = Average Activity Time
Benchmarking Activity Time
There are no singular standards to activity time; this will vary from business to business, website to website and page to page. A longer activity time also doesn’t necessarily equate to a better user experience, or better marketing strategy, and may in fact mean quite the opposite. As we stated before, this needs to be tallied along with goal completions in order to fully understand how your activity time affects your business.
When evaluating your website, we find that it’s beneficial to split it into the following segments in order to determine the value of activity time:
Blog or media content: Are your users spending enough time on these pages to actually watch your video, read your content or engage in another way? If not, you may be driving your customers to the wrong page, or want to reevaluate the page’s design. In the case of the latter we’d highly encourage A/B Testing in order to determine which design functions better.
End-Sales Funnel: We are taking this to mean the point at which users are going from product page to checkout, i.e. when they are making a purchase. In many cases we find that the checkout process takes far longer than necessary and ought to be reduced, with increased website drop-offs occurring on the more longwinded checkouts. Minimising the time spent here will encourage users to complete purchases and decrease dis-engagement.
Found in Google Analytics, the bounce rate is:
A single-page session on your site. In Analytics, a bounce is calculated specifically as a session that triggers only a single request to the Analytics server, such as when a user opens a single page on your site and then exits without triggering any other requests to the Analytics server during that session.
This is calculated by the total amount of single page sessions divided by the total amount of sessions.
Contrary to popular belief a high bounce rate isn’t necessarily a sign of poor user engagement. For instance, if your website is blog or article based, and part of your content strategy is to get people to view the one page (perhaps to sign up, or simply view your content), then a high bounce rate will not tell you anything about how effective the page is. You will need to look elsewhere for information on that.
On the other hand, if your bounce rate is high on pages significant to your sales funnel (i.e. on the homepage, or product category pages), then it is a sign that something is wrong. As we touched on earlier this could be for multiple reasons, including:
– Poor UX (usability)
– Inadequate content
– Inappropriate social media campaigns driving traffic to the webpage
– Inappropriate linking to the page
Benchmarking Your Bounce Rate
Though the bounce rate will vary from page to page, business to business and sector to sector, the following will give you an indication of the average bounce rates for certain page types to help benchmark.
For more information on how to bring your bounce rate down, check out our Ultimate Guide to UX for eCommerce.
It is also worth bearing in mind that single page sessions have a ‘duration’ of 0 seconds according to Google Analytics. This is because that after first landing on the page, there are no other hits which would allow Analytics to calculate time spent on that page.
User Engagement Metrics: Goal Completions
Goal Completions are defined by you, and are a reflection of your service or business. These can include sharing your content on external platforms, making a purchase, signing up, logging in and clicking through your website.
The higher the engagement with, or adoption of your defined goals, the better. Poor goal completion can be the sign of a few things including poor usability, inadequate content or price points.
Read more about Creating, Editing & Sharing Goals.
Customer Engagement Score Calculation
Saas Metrics has a succinct and easily implemented engagement score formula to help you calculate your customer engagement score. However, it will require some deep diving on your part.
List the main benefits of your product/service
Sit down with your team (or if it’s you, then by yourself), and not down all the benefits that your customers get from using you. Importantly these need to be based on things that can be easily tracked; actions or results.
Set a weight for each benefit
On a scale of 1-10 rank each benefit as to how beneficial it is, and make sure you are tracking them all separately. This is the importance of your customer completing these goals.
Calculate The Score
You will then need to set goals and other tracking metrics in order to compute a final score.
Engagement Score Formula
Customer Engagement Score = (w1*n1) + (w2 * n2) + … + (w# + n#)
In this formula ‘w’ is the weight given to each goal and ‘n’ the amount of times it is completed.
The resultant score should be used by sales and marketing teams in order to create strategies to increase engagement and monitor improvements. Nice and tidy.
Ok, so tracking user engagement isn’t the simplest thing to do. It requires a great deal of consideration by you and your team, serious tracking and constant tweaks. However, measuring how engaged your users are is of paramount importance for the success of your business. If you aren’t delivering a platform that they can use, let alone want to use, you will be forgotten in the back marshes of the internet.
If this feels all too much to handle at your eCommerce business, simply enquire for a free consultation. Alternatively have a look at our eCommerce Dashboards blog for free-to-use plugins for your Analytics account that will help you track customer engagement metrics!