Product Engagement

Product engagement is the measure of how much the users interact with your product. Product-led and software-as-a-service (SAAS) products can have thousands to millions of users using the product. The quantified data of how many users and how often they use the product is the product engagement.

What is the importance of product engagement?

Simply put, you cannot improve what you cannot track. Product engagement tells the intensity of how users are using it in a quantified way. Based on the engagement, one can perform actions to optimize the usage.

How is product engagement measured?

There are multiple methods by which engagement can be tracked. A business has to decide its primary engagement metrics on which it can focus. Naturally, there is no use in going behind each and every possible metric as it can lead to distractions and a lack of results. A business decides what engagement metrics have to be tracked based on the nature of the product, pricing, number of customers, their needs, etc. The primary set of engagement metrics defines the north star metrics of the product.

Some common product engagement metrics –

1. Usage metrics – This is used to track how many users are returning to a product at a particular frequency. This metric has significance as it tells if is there a good motivation and value added to the user so that he or she can return to the product again. Daily active users or weekly active users are examples of usage-based engagement metrics. Eg; for Instagram, the number of users coming to view stories on a daily basis tells the engagement of the product.
2. Transaction metrics – For high volume and high transaction-based products, how many transactions have been made is a good measure of engagement. Consider the example of Amazon. It sells thousands of products online daily. It makes sense to measure the transaction completion for them, as it directly adds to their revenue.
3. Value delivery metrics – For businesses like Adobe selling a suite of products as a package, measuring the number of actual value delivered to the users can be a good sign of engagement. For eg; a user completing editing a photo in Photoshop or completing the scanning of an image is a sign of value delivery. How many such events occur tells the level of engagement of users with the product.

Characteristics of product metrics

Product engagement metrics are defined by the company. Good product metrics always put the customers in the center. It takes care of the value delivered to the customer rather than any benefit to the company. For example, revenue earned can be a bad choice of engagement metrics. This is because it focuses on the benefit of the company and not the value delivery to the customers. Customers pay only when they find value. Rather, in the above example of Adobe, the value completion is a better choice as it focuses on the customers.

Product engagement metrics should always be a leading indicator of revenue, but not the revenue itself. As we saw in Adobe’s example, when a customer has been delivered with the value and is satisfied, it increases the chances of him or her coming back to the product and eventually paying for it, or if paid continuing to pay.

To summarize, good product engagement metrics are those who
1. Bring value to the customer
2. Are leading indicators to the revenue