Fueling growth for SaaS products is all about keeping users active and engaged. 

Want to maintain growth for your SaaS product?

It all begins with product engagement. SaaS companies should aim to educate, entertain, and guide their users to level up retention and satisfaction. 

For your team, that means creating a strategy that keeps users engaged. Users should feel compelled to log into the platform daily, if not multiple times per day. You want to promote the stickiness factor. 

Ready to engage more users? Check out this post for more information on:

  • The definition of product engagement

  • Why product engagement is essential for SaaS companies

  • 7 strategies to increase product engagement

  • How to measure product engagement 

What is product engagement? 

Product engagement is what it sounds like: how much engagement a product receives from its active users. It measures how users interact with a product at the most fundamental level. 

Measuring this type of engagement requires analyzing user behavior patterns, monitoring user engagement metrics, and seeing what actions users take. It also means observing active users and how they interact with the product. 

Managing product engagement involves a continuous process of tweaking the product so that users engage with it on a greater level. 

In a nutshell, product engagement is the extent to which users interact with a product: the more engagement, the better. 

Why is product engagement essential for SaaS companies? 

Building products that are made to last isn’t easy. Often, it’s not just about having the right features. The biggest challenge is teaching users how to use them properly (or even just making them aware that the features exist.) Users want products to exceed their expectations upon signup while evolving with their needs. 

Here are a few reasons why product engagement is essential for SaaS companies: 

Engaged users add to your revenue

SaaS companies know that retaining existing customers is cheaper than acquiring new ones. Acquiring a new customer can cost five times more than retaining an existing customer. Engaged customers spend more over time on subscriptions, upsells, and other related services. Moreover, customers who return for repeat purchases also increase the product’s revenue. 

They’re loyal to the brand

Engaged users are also more likely to recommend products they use often to their inner circle, which brings in new customers. Studies show engaged customers are happy to spend 20 to 40 percent more than other customers.

They help the product grow

Today, SaaS companies can reach users worldwide, and with the power of reviews, users can control a product’s online reputation. Companies should pay extra attention to how they’re perceived online and handle negative feedback delicately. Users tend to react positively when companies address their concerns, which is where the power of user engagement shows its value. 

How to increase product engagement: 7 strategies

Without further ado, here are seven strategies to increase customer engagement: 

1. Make a solid first impression

Each day, a prospective user experiences your product for the very first time. The initial interface a user sees should contain three important elements:

  • Explain how the product works

  • Encourage users to upgrade

  • Let users know where they can go to get assistance.

Products that do all of the above can take advantage of quick wins because users will stick around past their initial experience. 

There are many creative ways to welcome a new user to a product and show them how it works, such as tutorials, interactive videos, dummy data, and more. A recommended first step is to send a welcome message to greet each new user personally. This method is excellent for initiating conversations and encouraging conversions later on. 

2. Communicate frequently with new users

Let’s expand on welcome messages—our research suggests that they’re more likely to be clicked on, read, and responded to, which is why SaaS companies should send them to customers. Some users will just take the time to say “thanks,” while others will ask questions and continue the conversations. 

Communicating with users is an excellent way to engage them, encourage them to ask questions, try new features, and ultimately stick around. Starting the dialogue first means they’re less likely to give up on the product when they experience friction. 

This approach will help your product win over more customers and, at worst, give you insight into what’s causing confusion or missing in the product. 

3. Personalize user communication channels

Did you know that 72% of customers only engage with messaging personalized to fit their specific interests and needs? Personalization adds a human touch to the customer journey and encourages users to engage with your product consistently. 

Today, personalization has gone way beyond calling a user by their first name. Here are some more precise personalization tactics to increase user engagement: 

  • Personalize users’ onboarding by segmenting them by demographic, what they’re looking to get out of the product, etc. Then, tailor their onboarding experience to their specific needs. 

  • Employ personalized email marketing strategies. Segment users into lists based on demographics, user journey stages, product usage metrics, etc., and send customized emails to each list. 

  • Implement personalized in-app messaging to nudge or help users at the right time, and set up custom message prompts in-app to increase engagement. 

4. Create interactive and engaging content 

72% of marketers believe creating engaging content is responsible for increased customer engagement. The key to nailing content marketing is to publish educational content that will guide, inform, and inspire your users. 

You can leverage content marketing to increase user engagement by using these methods:

  • Streamline user onboarding by offering product tutorials and helpful documentation so users can better understand the product. 

  • Create impactful case studies, gather customer testimonials, and add customer success stories to your marketing channels. 

  • Write blog posts to position your company as a thought leader in your industry. 

5. Announce features, bug fixes, and improvements in-app

Your users likely only care about new product features or improvements when using the product, so that’s where you should be announcing them. So, you should employ in-app messaging—targeted notifications that you can send to users while they are active in the product. 

In-app messaging is powerful for so many reasons. It expedites real-time engagement, enhances the user experience, and harnesses the impact of contextual, personalized experiences when and where it matters most. Engaging users, while they are already paying full attention to your product, make in-app messaging the most effective messaging channel on the market.

Try using a digital adoption platform to create announcements without burdening your development team. With Lou, you can launch new feature announcements in minutes, with no code required.

6. Engage customers during free trials

If your product is providing tangible benefits and solving problems, you can stand to learn a ton from free trial users.

There are typically two types of users you’ll witness in a 14-day free trial. One is a casual user who saw your product on social media or a tech blog and wants to take a quick look at what you’ve built. They don’t have a problem to solve and aren’t prospects who have valuable feedback to share. 

Then, some signups are interested in testing your product but need a nudge toward success. If you’re unsure what their idea of success is, simply ask them. This approach can be tricky, but some platforms allow you to automate surveys to gather essential user feedback in real-time. 

7. Employ an omnichannel approach to engagement

Businesses that employ a robust omnichannel approach to user engagement generally retain 89% of their customers while improving their customer experience. All of your users have different preferences for communication, which is why a one-size-fits-all approach no longer works. 

An omnichannel approach allows you to interact and engage across users’ preferred channels. It decreases turnaround times, amplifies customer support efficiency, and overall leads to improved satisfaction. 

Here are some tactics for an omnichannel approach: 

  • Collect feedback to learn about users’ interests and needs. Use this data to understand user preferences for communication. 

  • Integrate personalization strategies in an omnichannel approach to increase satisfaction and retention. More personal conversations will lead to increased engagement. 

  • Keep brand messaging consistent across all communication channels so users can better connect with your brand. 

How do you measure product engagement? 

Product engagement is typically measured through the Product Engagement Score (PES.) You refer to PES as a report card for a product’s health. It’s a composite metric that mixes adoption, growth, and stickiness to display a holistic view of how a product performs.

The formula is: 

(Adoption + Stickiness + Growth) / 3

Here’s how to measure each of the elements:

  • Adoption: The average number of core actions adopted across all active visitors or accounts.

  • Stickiness: The average percentage of weekly active users who return to the product daily (DAU/WAU). 

  • Growth: The sum of recovered and new accounts or visitors, divided by churned accounts or visitors. 

Once you have a broad view of the product’s health, you can start working on improving each of those metrics.

User engagement is essential to improving conversion rates

User engagement is undoubtedly one of the most critical factors for your business to prioritize. More engaged customers form a personal connection with your brand, thus becoming life-long, satisfied customers. 

Lou is a platform that offers beautiful in-product experiences to boost user engagement. Learn more here.

Published on August 23rd, 2022