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Analytics

10 Key Customer Engagement Metrics Explained

Ninad Pathak
Published:
November 3, 2023
Updated:
June 10, 2024
Table of Contents

Customer engagement is crucial for business growth and profitability. Highly engaged customers buy more, promote your brand to others, and stick with you for the long haul.

But how do you know if your customers are engaged?

This is where customer engagement metrics come in. When tracked consistently over time, these metrics reveal objective insights into how customers interact with your brand. 

In this article, we'll cover the top 10 customer engagement metrics every business should track in 2023 and beyond. We'll define each metric, explain how to calculate it, and discuss its importance.

Let's dive in!

What is Customer Engagement?

Customer engagement is the process of building a long-term relationship with your customers. It measures how often customers connect with your brand, the different channels they use to connect, and how many of them return to make a purchase.

Simply put, customer engagement refers to how customers think, feel, and act toward your business and brand over time.

It goes far beyond a simple transactional exchange. Rather, engagement measures the depth of a customer's relationship and emotional connection with your brand.

Some examples of highly engaged customers:

  • Visit your website frequently and spend time reading content
  • Get social with your brand by liking and commenting on posts
  • Open and click on emails and marketing campaigns
  • Provide feedback and reviews on their experience
  • Participate in surveys, contests, or online communities
  • Respond to special offers or actively refer friends
  • Increase their purchase frequency and order sizes over time

On the flip side, disengaged customers only interact on a superficial level. They don't open your emails, ignore social media, rarely visit your site, and overall have negligible connection to the brand, increasing the risk of customer churn.

These customers are at high risk of churning and switching to a competitor. 

For example, an early-stage startup using a SaaS platform may be highly engaged—frequently using product features, staying updated through newsletters, engaging on social media, participating in user research, and even recommending the platform to peers. 

An enterprise client may be relatively unengaged—using only basic features, providing limited feedback, and feeling indifferent towards the SaaS provider brand.

When you monitor customer engagement through various metrics, you can identify disengaged accounts proactively so you can reactivate them before it's too late.

What are customer engagement metrics?

Customer engagement metrics are data points that help companies understand how customers interact with their brand and product. Tracking customer engagement metrics serves several important purposes:

  • Achieve a better understanding of target audience: For our startup example, metrics may show the product resonates well with early-stage teams looking for agile collaboration tools.
  • Pinpoint strengths and weaknesses in sales funnel: Customer engagement metrics may reveal messaging is not working to convert enterprise prospects at the top of the funnel.
  • Know what to prioritize & refine the customer journey: Since enterprise clients have larger deal sizes, it may make sense to refine messaging and sales collateral to better appeal to their needs.
  • Improve customer experience and retention: Analyzing usage metrics can reveal where customers struggle or lose interest, highlighting areas to improve CX and retention.

Continuing our engaged vs unengaged customers example, for the early-stage startup, vital engagement metrics may validate their current targeting and product-market fit. 

For the enterprise prospect, weak metrics signal a need to adjust strategy to better appeal to and support those customers. 

Tracking these metrics gives your sales and marketing teams visibility into customer behavior that can then be used to tailor messaging, visuals, and even product features over the long run. 

10 Customer Engagement Metrics You Should Track

So, what metrics should you track? Let’s look at the ten key customer engagement metrics that you should consider. 

1. Bounce Rate

Bounce Rate

The bounce rate measures the percentage of visitors who enter your site and then leave ("bounce") after viewing only one page. 

High bounce rates indicate your content may not be resonating with users or properly targeted.

Bounce Rate = (Bounces / Total Site Visits) x 100

For example, if you had 5,000 bounces out of 25,000 visits, your bounce rate would be:

5,000 / 25,000 x 100 = 20%

Across 150 million page views taken as a survey by Animalz, the median bounce rate for SaaS blogs in 202 was 80.33%. 

But the general rule of thumb is—lower is better. 

A high bounce rate means visitors aren't finding what they need on your site quickly enough. As a result, engagement is superficial.

For example, an ecommerce site had 25,000 entrances last month and 15,000 bounces. The bounce rate would be (15,000 / 25,000) x 100 = 60%. You could try to get this below the 50-65% ecommerce average benchmark by trying one of the following:

  • simplify navigation so the user can find what they came looking for
  • improve page load speed
  • highlight your phone number prominently on the contact page
  • add pricing breakdown
  • Add visual elements like images or videos.

This article by SEJournal can be a great starting point to reduce bounce rates and increase the time a user stays on your page—a.k.a. Average session duration.

2. Average Session Duration

Average Session Duration measures how long users are actively engaged on your website during a visit. It's calculated by totaling all session durations across your site and dividing by the number of sessions.

Longer average session durations signal you provide valuable, relevant content that engages visitors. Short durations may indicate the content isn't resonating with users or site navigation needs improvement.

The average session duration across SaaS websites participating in the survey is 77.61 or 1 minute 17 seconds.  

Formula:

Total Session Duration / Number of Sessions

For example, an ecommerce site has 5,000 sessions in a month for 15,000 minutes. The average session duration would be 15,000 / 5,000 = 3 minutes. 

An analytics tool like Google Analytics or Factors will automatically calculate and display this data on your website tracking screen.

This aligns with general benchmarks. If the duration was lower, the site owner could look to improve content quality or navigation to drive up engagement.

3. Scroll Depth

Scroll Depth

Scroll depth measures how far down a page visitors scroll before leaving. Higher scroll depth indicates engaging content. 

Typically, a scroll depth of 50% or more means that your content is resonating with visitors. And anything lower should be a cue that you need to spend time optimizing that piece of content.

For example, your latest blog post sees an average scroll depth of 25%, meaning most visitors bail out after reading just the first 1/4 of the content. 

In response, you shorten the intro paragraph, add subheads, break content into shorter paragraphs, and include visuals after every few sentences—these changes drive scroll depth to 65%, helping your users engage further. 

4. Social Media Engagement

Social media engagement rate measures the amount of engagement (likes, shares, comments) a post gets compared to reach. Higher rates indicate content resonates. 

Social Media Engagement

Powerful analytics tools like Factors can help you bring together data from across different social media platforms into a single place—giving you a single source of truth (SSOT) dashboard. 

How to calculate social media engagement:

(Likes + Shares + Comments) / Followers x 100 = Engagement Rate

For example, if you had 30 total likes, shares, and comments over 1,000 Facebook page followers last month, your engagement rate would be:

30 / 1,000 x 100 = 3%

Average engagement rates vary widely by platform. Here are the average social media engagement rates for Technology businesses.

  • Instagram: 1.48%
  • Facebook: 0.96%
  • X (Twitter): 1.26%
  • LinkedIn: 1.53%
  • TikTok: 1.20%

The key is not to compare your engagement rate to others in your niche. Rather, track it over time to see if your rate increases or decreases month-to-month.

5. Customer Satisfaction (CSAT) Score

The CSAT score measures customer satisfaction with service interactions, often via surveys. Higher CSAT correlates with better engagement and loyalty.

Typical survey questions ask customers to rate their experience on a 1-5 or 1-10 scale, from very unsatisfied to very satisfied. The percentage of positive responses becomes the CSAT score.

The numbers below can range from 0% to 100%. For example, a score of 75% means that 75% of the users who answered the survey are satisfied with the product/service. 

According to Fullview, CSAT benchmarks by industry are:

  • Software - 78%
  • Retail - 80%
  • Internet providers - 64%

For example, an ecommerce company surveys customers and finds:

  • Fifty customers responded 9 or 10 for "very satisfied."
  • Twenty responded 7 or 8 for "satisfied."
  • Ten responded six or below for "unsatisfied."

The CSAT score is 50 very satisfied / (50 very + 20 satisfied) = 71%

6. Net Promoter Score

The NPS survey measures customer loyalty and likelihood to recommend on a 0-10 scale. Higher NPS indicates growth potential through referrals.

Net Promoter Score
Source

NPS is calculated by finding the percentage of customers who are:

  • Promoters (9-10 score): loyal enthusiasts who will promote your brand
  • Passives (7-8): satisfied but unenthusiastic
  • Detractors (0-6): unhappy customers who can damage your brand image

Subtracting the percentage of Detractors from Promoters yields the NPS.

Retently ran NPS benchmarks for different industries. Here are two industries relevant to us:

  • Software - 64+
  • Consulting - 67+

For example, a SaaS business surveys customers and finds:

  • Promoters: 70%
  • Passives: 10%
  • Detractors: 20%

Their NPS is 70% - 20% = 50%. This is on the lower end for software businesses, revealing opportunities to improve loyalty and satisfaction. 

Track your NPS over time to see if it's improving or declining. If it is declining, try to talk to your detractors and understand if there’s a fixable problem that’s causing customers to rate you lower. 

When you find something, start by fixing it and announcing that you’re taking steps in the right direction. This will help your customers know that you aren’t simply collecting surveys but also working on them. 

7. Net Dollar Retention (NDR)

The NDR compares recurring revenue from existing customers period-over-period. Rising NDR indicates expanded purchases from engaged customers.

Formula:

Net Dollar Retention Formula

A report by Benchmarkit (formerly RevOps Squared) reveals that the median net dollar retention is 105%, where a 100% NDR falls in the 75th percentile. 

For example, a SaaS had $1M in revenue from existing customers last quarter. This quarter's revenue was $1.1M, with $100K from upsells but $50K lost from churn. Their NDR is:

(($1.1M + $100K - $50K) / $1M) x 100 = 115%

This exceeds the 105% median, demonstrating solid expansion and engagement from the existing customer base. That brings us to customer churn, a measure of how many customers leave after signing up. 

8. Customer Churn Rate

The churn rate measures the percentage of customers lost in a period. Lower churn signifies higher satisfaction and engagement.

Here’s the formula to calculate churn:

(Customers Lost / Starting Total Customers) x 100

CustomerGauge released an NPS and retention report in the B2B industry. The median churn rate for IT services is 12%, and that for the software industry is 14%. 

Customer Churn Rate

To benchmark your churn rates, check this example out. As a SaaS, suppose you had 1,000 customers last quarter and lost 75 of them. The churn rate will be calculated as below:

(75 / 1,000) x 100 = 7.5%

This is well below the 14% median churn for software businesses. However, that does not mean you should ignore it and move on. Reducing churn helps boost revenue growth so you can improve the onboarding process, account management, customer experience, and even retention promotions.

The lower your churn, the better. High churn signals poor customer engagement and satisfaction. Dig into why customers leave and address weak points across marketing, product, service, and other areas driving attrition.

9. Customer Lifetime Value (CLTV)

Customer Lifetime Value

CLTV estimates future revenue a customer generates over their lifetime relationship with the company. Higher CLTV indicates greater engagement and business value.

Formula:

Average Order Value x Purchase Frequency x Average Customer Lifetime

According to CustomerGauge’s reports, the software industry has a CLTV of US$ 240,000, while a business consultancy has an average CLTV of $385,000. 

However, this may not represent the indie startups or smaller SaaS businesses with 1-10 employees. 

How can you determine your CLTV? Let’s look at it through an example. 

A SaaS customer subscribes to a monthly plan costing $500. They remain active for four years. Their CLTV is:

$500 x 12 x 4 = $24,000

As you can see through this formula, boosting retention length, increasing the subscription prices, asking users to upgrade to better plans, and improving CX can help boost your customer lifetime value. 

10. Daily/Monthly Active Users (DAU/MAU)

Daily-Monthly Active Users
Source

DAU/MAU measures daily and monthly active usage of apps and software. Higher ratios signify strong engagement and retention.

Sequoia tweeted that the average number of DAU/MAU for most businesses is lower than 20%. Very rarely does a business cross the 50% threshold. Whereas, with WhatsApp, the DAU/MAU hits 73% on average and is one of the highest recorded numbers.  

To determine the DAU/MAU for your business, check your analytics for the total monthly active users. Then, check the daily active users. 

For instance, if your daily active users are 1000 and your monthly active users are 5000, your DAU/MAU will be—1000/5000 * 100 = 20%

A lower percentage signals an opportunity to improve retention and engagement through changes to the user experience, onboarding, notifications, and loyalty programs.

Mistakes to Avoid When Measuring Engagement

While it's critical to track customer engagement KPIs, it's just as important to avoid these analysis and reporting mistakes:

  • Using arbitrary targets without research—Don't randomly choose target metrics without researching realistic industry benchmarks and averages. Basing goals on competitive data provides an objective comparison point for whether your engagement levels are truly high, low, or average.
  • Over-reliance on quantitative data—Hard metrics only reveal part of the engagement story. Supplement with qualitative data through post-transaction surveys, customer interviews, focus groups, and monitoring reviews. This provides context into the "why" behind metrics.
  • Data silos across teams—Break down silos between marketing, sales, support, and product groups. Share insights cross-department to improve engagement holistically across the customer journey.
  • Obsessing over vanity metrics—Don't fixate on vanity metrics like website visitors, email subscribers, or social followers. These don't measure true engagement or business impact. Focus on metrics tied to outcomes.
  • Forgetting ongoing analysis—Don't just report metrics—actually act on what they tell you! Research why engagement levels change over time and continue optimizing based on insights.

How a Platform Like Factors Can Help

Trying to measure customer engagement across your business can get messy fast. You've got data in all these different places—your website, email stats, support tickets, social media, etc.

And those sources almost never talk to each other. So you're stuck manually pulling reports from individual tools and then trying to make sense of fragmented data to see the big picture. Not fun.

That's where Factors comes in. 

It's an analytics platform that brings all your customer data together in one place. Finally—a single source of truth!

1. Unified Data and Reporting

Factors connects your data from sources like your website, CRM, marketing campaigns, customer support channels, and more. This provides a complete view of engagement across touchpoints on one centralized dashboard.

Apps

You can instantly analyze metrics by various segments like channel, campaign, cookie ID, account, geo, device, and more without tedious exports or merges between tools. Trend reporting over time is also streamlined.

2. Flexible Goal Tracking

Flexible Goal Tracking

Factors gives you the flexibility to define and track engagement KPIs tailored to your specific business needs. For example, you may track CES for support and email campaign CTR. Determine the metrics most aligned with your goals, then track performance over time.

3. Account Identification and Scoring

Account Identification and Scoring

A challenge with engagement data is connecting metrics across anonymous and known users. Factors uses proprietary IP resolution to identify anonymous traffic at an account level.

From there, you can easily segment and filter accounts based on attributes like industry, tech stack, and more. Apply scoring models to tag accounts from highly engaged to at-risk based on your criteria. 

The major benefit of Factors is its unified approach. Since it connects data from ad campaigns, websites, G2 pages, and more together, it can help you score leads considering customer engagements across all these platforms instead of basing decisions on single-platform engagements. 

4. Customizable Dashboards and Reporting

Customizable Dashboards and Reporting

Factors enables customizable reporting segmented by channel, campaign, account, and other attributes. Easily create leaderboards and reports for key metrics and trends visible to stakeholders company-wide.

You can also build customized dashboards with charts and breakdowns for different teams like marketing, support, and sales. And along with that, it’s enhanced automated reporting ensures insights are readily accessible whenever you need them.

5. AI-Driven Recommendations

AI-Driven Recommendations

Factors takes insights further by providing AI-powered recommendations to improve engagement. The system analyzes changes in metrics and suggests actions to boost performance.

For example, if you type in something like “how do I improve my demo submissions”, Factors will run AI-fuelled algorithms in real-time and offer a list of touchpoints that are already working and can be optimized to achieve the desired result. 

This centralization of engagement data helps you uncover insights instantly with Factors—helping you make smarter decisions and optimize experiences faster. 

Start Using Customer Engagement Metrics And Build Customer-Focused Strategies

Tracking engagement gives you priceless insights into the customer experience. With the right data, you can spot friction points, find your best segments, and unlock growth opportunities.

But collecting all this data sounds easier than it is. Website stats live in your analytics platform. Email reports need downloading. Support tickets sit in a separate system. Stitching it together feels like a puzzle.

That's why Factors comes in handy. 

It automatically brings data together from your website, ads, email, support, and more. Now you have a single view of engagement across touchpoints.

Factors also lets you define the metrics most important to your goals. 

Want to track demo requests and trial signups? No problem—you can monitor the KPIs for your unique business needs.

The platform identifies known accounts from anonymous traffic so you can filter and segment at the account level. With Factors, you can build custom dashboards to share key metric trends and insights across your teams. 

Its AI-powered recommendations analyze changes in your data and suggest ways to optimize engagement.

Want to learn how Factors can help enhance your customer engagement and experience? Book a demo today!

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