What are product engagement metrics in the SaaS model?
Gathering and analyzing metrics is the most critical aspect of every business strategy. Regardless of industry, metrics are the foundation for smart business decisions. When your business is a SaaS business, all metrics are important. However, if you want to grow your business, product engagement metrics should drive your marketing and business strategies.
Product engagement metrics measure the way your customers engage with your SaaS product at various levels. These metrics provide valuable information you need to influence customer behavior and maximize the use of your product. By maximizing the use of your SaaS services, you’ll generate more income and your business will grow.
Fast growth is what every SaaS business owner wants. It’s not impossible to achieve. For reference, Nathan Latka keeps track of thousands of private and public SaaS companies here, in which you can track for free. The good news is you don’t need to be stationed in the Bay Area to achieve that level of success, nor do you need to raise millions of dollars. Any company has the potential for growth provided they follow the right formula and focus on the right metrics.
Long-term product engagement is a SaaS priority
In the SaaS model, long-term product engagement is the most important metric. SaaS models depend on long-term engagement to survive, thrive, and grow. Without tracking this metric, it’s impossible to know where your business stands. To achieve your long-term business goals, you need to know where you stand at all times.
While long-term product engagement metrics are crucial, looking at numbers isn’t enough. You need to put those metrics to work by identifying areas that require improvement. After all, if your business isn’t constantly improving its products and services, you’re falling behind.
Product engagement metrics tell you where you can improve
Every SaaS product has room for improvement and SaaS businesses should continually work toward making their products better. Focusing on product engagement metrics helps you make accurate and targeted improvements to increase customer satisfaction, retain existing customers, and generate new customers.
When discussing important engagement strategies, marketing expert Neil Patel says SaaS teams must build a marketing strategy that keeps users engaged. Ideally, you want customers to log in to your platform as much as possible over the long-term.
Long-term engagement is an umbrella metric comprised of the following, all of which are crucial for driving successful SaaS business strategies.
- Active installations at any given time: The number of active installations compared to your total sales will tell you your customer retention rate. If you don’t see a high rate of customer retention, you now have the ability to investigate to find out why. Once you know why you have a low retention rate, you can create a plan to increase retention by resolving the issues you uncover.
Without this metric, you won’t know if your customer retention rate is lower than it should be, or if you’re achieving an exceptionally high rate of retention. Not knowing where you stand translates to missed opportunities to do better and/or overspending on unnecessary strategies.
- Active users: On a daily, weekly, and monthly basis, how many people are using your service? You need to know. However, it’s up to you to determine which metric is more appropriate for your product. For instance, daily users might not be as important to you as monthly users.
If you determine the number of active users is low, you’ll know it’s time to launch a demand generation campaign.
- Engaged users: Your users can log in and be considered “active,” but what are they doing in their account? Are they using your product or are they just logged in forever and not engaging the features of your product?
Take Adobe Photoshop, for example. A user can be logged in automatically each time they start their computer and never once open the Photoshop application. You need to know how many users are actively engaging your product.
- The features being used: Hopefully, you’ve got a way to determine which features your users are taking advantage of and which features are being ignored or used less often. This will tell you what features are important to users, which may not include all the features you think.
For example, say you’re selling an application that controls a smart thermostat and you add in the features of a TV remote control. You might have a few people who use your TV remote features, but if your metrics show a lack of use, you’ll have a reason to remove it in the next release. Sometimes users aren’t so keen on the features developers find cool.
- How often customers disable your application: If users are disabling your app, it’s a clear opportunity for improvement. This is a metric you can’t afford to ignore. If your app conflicts with other apps, you’ll know your developer needs to work on ironing out the bugs. If your app creates an inconvenience for customers in certain situations, your development team will need to improve the functionality of your app.
- How often customers enable your application: An app that needs to be enabled manually will automatically be a stumbling block for any SaaS product. However, if that’s how your app currently works, knowing how often customers enable your app will tell you your app’s priority level.
If customers are paying for your services but don’t remember to enable the app, it’s time to develop a version that remains enabled by default.
- Customer retention time for paid and free trials: How many free trial customers become paid customers? Knowing this metric will help you sort out your marketing strategies for both paid and free trials.
Is your product engagement data accurate?
You can’t afford to make decisions based on incorrect, incomplete, or inaccurately interpreted data. Financial decisions based on inaccurate metrics can have dire consequences for your business.
Contact us at OpGen Media if you’re ready to track and analyze product engagement metrics to maximize your product use. We’ll evaluate your core marketing operations and demand generation strategy to help you achieve the success you deserve. Request a free consultation below to learn how we can help you grow your SaaS business.