What Is Product Engagement? 10 Tips To Improve Engagement

Building a successful product is a challenge. After all, it's not enough to create a solution that effectively resolves a pain point. To increase your return on investment, you also need to ensure that your target audience actually wants to use your product. This is where product engagement comes in. By focusing on engagement during the product design process, you can create a solution that is not only effective, but also appealing to your target audience. This article will help you get started by defining product engagement and offering tips to improve it.

NUMI's product design process can help you boost product engagement by creating a solution that your target audience actually wants to use. Our human-centered approach focuses on researching and understanding your audience to create a product that meets their needs and interests.

What is Product Engagement?

Picture stepping into a bustling marketplace. Each stall, storefront, and broadcaster calls for your attention, but the ones that hold your interest best understand your needs, speak your language, and know how to convey that they can fulfill your desires. This is what product engagement does in a digital space. 

We essentially discuss the interaction between consumers and the product or service they are using when we talk about product engagement, whether in the world of: 

• E-commerce
• Downloadable software
• Digital services 

It epitomizes the connection that a user feels towards a product, often reflected by their degree of interaction and usage. 

Why Does Product Engagement Matter?

Isn't product engagement just another buzzword in a sea of marketing jargon? The answer is a resounding no. Product engagement is an integral and transformative concept in user-centric businesses. Marketers and product developers emphasize product engagement as it indicates how well a product performs and resonates with its users. 

The higher the level of product engagement, the higher the user satisfaction, brand loyalty, and ultimately the profitability of the product. Product engagement is one of the critical factors that drive: 

• Product growth
• Increase lifetime value
• Boost profitability (engaged users spend 60% more!) 

It improves product experience, increasing customer retention, and minimizing churn. 

What Drives Product Engagement?

Interestingly, product engagement isn't restricted to just the usage period. It’s facilitated by all the touchpoints a customer interacts with right from the first advertisement they see: 

• To the purchasing process
• To the actual use of the product
• Even after-sales service

Every interaction counts and contributes to the overall impressions a user forms about the product, which in turn affects engagement levels. 

How Can Product Engagement Help Your Business?

Having a good product isn't enough to be successful. Product engagement is the secret ingredient that can transform a good product into a wildly successful one. But why is this so? At its heart, product engagement is about how often and how deeply customers interact with your product. High levels of product engagement mean that users find your product valuable and enticing, ultimately leading to greater customer satisfaction and loyalty. 

The Dual Impact of Product Engagement: Boosting Recommendations or Risking Churn

This could result in higher chances of recommendations, inflating your product's reputation and success. On the flip side, if users barely interact with your product or use it sparingly, it might indicate that they don't find it useful or satisfying. This could lead to churn, negative reviews, and sluggish sales growth. Hence, product engagement is not just a nice-to-have aspect, but a vital component of any thriving business.

Why is Product Engagement Crucial?

Product Engagement: The Secret to Success for SaaS Products 

Product engagement is essential for any business aiming to achieve sustainable growth and customer loyalty, especially in the competitive SaaS industry. High engagement rates mean that users find value in your product, which is crucial for both customer retention and brand reputation.

Engagement Rates Indicate Product-Market Fit 

Low engagement rates signal that users may not see value in your product, which could mean a mismatch with their needs or expectations. Even if you have a well-designed product, low engagement suggests it’s not meeting users' goals or providing the benefits they’re looking for. High engagement, on the other hand, reflects strong alignment between what your product offers and what your users need.

Engaged Users Stick Around 

In the SaaS market, users have countless options. Customers may quickly move to a competitor that meets their needs if your product isn't engaging. Engaged users are more likely to become loyal customers and less likely to explore alternative solutions, giving you a significant advantage in a crowded market.

Engagement Drives Value Creation 

Product engagement and perceived value reinforce each other. As users engage more deeply with your product, they experience its benefits firsthand, which boosts their perception of value. This perceived value, in turn, encourages even more engagement, creating a positive feedback loop that strengthens user loyalty and overall satisfaction.

Low Engagement is a Symptom of Deeper Issues 

Low engagement is often symptomatic of deeper issues, such as: 

• Confusing user onboarding
• Unaddressed feature gaps
• Ineffective communication

By examining product engagement data and gathering user feedback, you can pinpoint the areas where users struggle and make targeted improvements, whether through: 

• Feature updates
• User interface adjustments
• More intuitive onboarding processes

Engagement Data Helps You Allocate Resources Efficiently 

Tools for tracking engagement help you gain a clear picture of user behavior, allowing you to allocate resources effectively. Engagement data highlights which features resonate most with users, helping you prioritize development and marketing efforts based on what really drives value.

High product engagement indicates a successful product and builds a foundation for ongoing customer satisfaction, loyalty, and growth. Prioritizing engagement is key to creating a product that meets users’ evolving needs and stands out in a competitive market.

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How to Measure Product Engagement

Define What Product Engagement Means for Your Business

The first step to measuring product engagement is defining what it means for your business. Engagement metrics vary significantly based on the product type and industry. For a food delivery app, high engagement might mean users placing orders multiple times a week, while for a budgeting tool, it may involve users returning monthly to manage their finances. 

Define what meaningful engagement looks like for your product to target the most relevant behaviors and ensure that your metrics reflect actual value. 

Choose the Right Product Engagement Metrics to Track 

Once you've defined what engagement means for your product, it's time to select the metrics you'll track to measure performance against your goals. Common product engagement metrics include: 

• Product usage metrics: Track daily active users (DAU), monthly active users (MAU), and session duration to get an overview of general usage. 
• Feature utilization: Measure feature clicks, adoption rates, or events to see how users interact with specific features, which can inform product development. 
• Retention: The key indicators of long-term engagement and loyalty are: some text
  • Retention rate
  • Churn rate
  • Lifetime value (LTV) 
• Conversion: Monitor conversion rates during critical points in the user journey, such as: some text
  • Onboarding
  • Free trial completion
  • Promotional offers

Measure Engagement with Analytics Reports 

Analytics platforms with built-in features, like Userpilot, are useful for tracking product engagement through reports such as: 

• Feature usage reports: Analyze which features see the most interaction. 
• Trend analysis and heatmaps: Identify high- and low-engagement areas.
• Funnel and path analysis: Examine the user journey to locate drop-off points and areas for potential improvement. 

These reports allow for a thorough understanding of user behavior, enabling you to identify engagement patterns and trends. 

Utilize Feedback Surveys to Understand User Behavior

While analytics reveal how users interact with your product, in-app surveys help explain why they engage or disengage. Trigger surveys at key points, like task completion or near the end of a trial period, to gather insights into user motivations. Use a mix of open- and close-ended questions for a balanced view of user experiences and expectations. 

Continuously Monitor Engagement and Enhance User Experience 

Product engagement isn’t static; it requires ongoing attention as user preferences evolve. Track engagement regularly to pinpoint areas needing enhancement and set benchmarks to assess your progress. 

Use insights to form hypotheses for: 

• Improvement
• Implement changes
• Validate them through A/B testing

Making this an iterative process helps you fine-tune the user experience continually, fostering sustained engagement.

5 Metrics For Measuring Product Engagement

1. Percentage of Daily/Monthly Active Users (DAU/MAU) 

This is also an important metric as it shows you success in a time frame. Looking at this metric, you will better understand the success of your onboarding. The better the onboarding, the more daily/monthly active users you will have. If people are not giving up using your app, then the onboarding process is effective. 

Calculation: Total number of users / daily/monthly active users. 

2. Stickiness 

This is a great metric that shows how often users come back to your app. The closer the number of DAU to the number of MAU, the more confident you can be about your product engagement. It indicates that your users have learned how to find value in your app, and they can’t get enough of it. 

You can calculate Stickiness by dividing the number of Daily Active Users (DAU) by Monthly Active Users (MAU). We wrote an article about how to improve your product's stickiness. 

3. Average Session Durations 

This is a tricky metric because it should be considered in relation to what your product wants to achieve. Let’s say you have a taxi app. The fact that your users have long session durations for such an app suggests that my users may have difficulty finding what they are looking for. 

On the other hand, if you have a social media app, long session durations suggest that you provide users with what they want. 

4. Retention Rate 

Research suggests that 65% of a business's profits come from existing customers. Customer retention shows the success of your product and your business in general. Therefore, it is one of the most crucial metrics that you need to track to have a broader perspective on your users’ engagement with your product. 

Here is how you can calculate retention: 

[(CE – CN) / CS] x 100 CE 

The number of customers at the end of the period measured 

CN – the number of new customers during the period 

CS – the number of customers when the period started

5. Churn Rate 

Churn rate refers to the rate at which your users stop using your product. Compared to a high retention rate, which indicates success, a high churn rate indicates the failure of your business and product to provide users with what they need. 

A high churn rate shows that you are failing to engage your users with your product. To calculate your churn rate, divide the number of customers who leave within a given period by the number of customers who join at the start of the period. 

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10 Tips To Improve Product Engagement

1. User-Friendly Design: Make Product Engagement Easy

Did you know only 55% of companies currently conduct any UX testing? If your product is complex and has a wide range of features and use cases, you need to be strategic with how your product design helps customers engage in the easiest way possible. Flagging features, changing the font, and adding highlights can all make it simpler for customers to get used to new parts of your product. 

Tailored Feature Announcements for Targeted Customer Engagement

If you have a range of different use cases within your product, it’s a good idea to highlight the relevant new features to each type of customer. You only have so much bandwidth of your customer’s attention, and wasting it on highlighting an irrelevant feature doesn’t make sense. Not overwhelming or over-messaging your customers is a foundational element of a strong customer engagement strategy.

2. Get Consistent With Updates & Announcements: Keep Users in the Loop

Your users aren’t mind readers. Similar to how advertising works, if you don’t tell people about things the chances are they won’t know. It sounds obvious, but you must allow your customers to learn about and understand new features I’ve added to my product. Not only does this encourage strong engagement, but it also shows how much work and effort my team is putting into improving my product. 

Tailored Feature Announcements for Targeted Customer Engagement

Yet, it’s all too common for businesses to overlook this step or choose an ineffective way of broadcasting the message. One-off messages or an in-app notification can be much more effective than a random social media post. 

This is especially true as you’ll be able to segment audiences and see who has interacted with the messaging and, if so, what steps they took in response.

3. Nail Your User Onboarding And Keep On Teaching: The Key To Product Engagement

It's so important to get onboarding people into your SaaS product right. The more tailored you can be right from the start, the better. Building out personalized onboarding sequences is one of the best tips we can give you. Adding guidance within your product is also a great way to get your customers using those key activation features. 

A bonus is that these types of resources will engage customers and keep them around for longer. Educating your customers about new features or new ways to use old ones should be a core element of any product engagement strategy.

4. Tailor The User Journey By Asking Questions: Get Personal With Engagement

If you’re not already doing so, you’ve got to start asking your customers questions about their goals and how they want your product to help them. You can use custom forms to ask your customers absolutely anything I want. Learning directly from your customers is the best way to begin making any changes to my strategy. 

It’s the most accurate, fastest way to change up your product and boost customer engagement because you understand exactly where it is they want to go. 

Tailored Feature Announcements for Targeted Customer Engagement

By asking a question during sign-up and onboarding, like, " What’s your number one priority with [your product’s solving point]?” you can start building a tailored journey. A tailored journey is the best way to speedily get your customers to their ‘aha!’ moment. The sooner that happens, the more likely they will become and remain engaged with your product.

5. Identify Your Most Engaged Customers And Learn From Them

In addition to directly asking your customers what they need and want, you should integrate behavioral data to validate their responses and detect wider context. Analyzing behavioral data means you can get the basics right and lay the foundations before you start asking deeper questions to tailor and personalize a customer’s experience. 

Tailored Feature Announcements for Targeted Customer Engagement

First, the data you should look at is the behavior of your best, happiest, most engaged customers. What’s driving their satisfaction with your product? These are the kinds of customers you want to find more of. Learning how they behave and looking back at their journey to get there offers a fantastic set of insights. Use what you learn to encourage your newest customers to follow in these highly-engaged footsteps.

6. Communicate in the Right Way: Speak Your Users’ Language

To increase product engagement, you must know how to talk to your customers. When announcing new features, asking for feedback, or helping users with their problems, you should find the suitable medium, best tone of voice, and the right moment. You have various mediums that you can use to engage with your users. 

For example: In-app Messages, Push Notifications, Emails, SMS Messages. In-app messages are the most effective way to communicate with users compared to other methods. They are great at catching the users’ attention and conveying what they need to know. They are instrumental when announcing new features. 

Leveraging Push Notifications and Personalization for Re-Engagement

However, in-app messages can only be used while your users use the app. You can send push notifications when users are not using your product. By segmenting users who haven’t been using the app for a while, you can send them push notifications to get their attention. 

When communicating with users, you should personalize my messages. Personalization makes it ten times better for users to build a relationship with your product and business. You should personalize every process of a user’s journey in your product.

7. Do A/B Testing: Optimize Your Product Engagement Strategy

Now that you have segmented users after educating yourself through product data, you can do A/B tests to see which strategy will work best for increasing your product engagement. By constantly analyzing customer feedback and product data, you can consistently improve product engagement for your SaaS product. 

Through finding the points where your users struggle the most and running A/B tests, you will be able to make the necessary changes for improving product engagement.

8. Encourage Your Users to Take Action: Motivate Users to Engage

You should only sometimes ask for something from your users. You should also give them something in return. Your engagement rates will increase when you encourage your users to take action. Rewards, discounts, or birthday gifts are encouraging for your users.

9. Start a Referral Program: Leverage Your Existing Users For Growth

You can also try out a new strategy, such as referral programs to boost growth. By encouraging your existing users to refer new users, you can create a well-structured referral program, ultimately boosting your user base by leveraging the networks of your current users. Also, remember that you should offer incentives for both the referrer and the referred. 

To make this happen, you should simplify the referral process to maximize participation, design a compelling offer to attract users, and promote the program through each marketing channel.

10. Expand Your Reach with Partnerships and Collaborations: Use Strategic Alliances to Improve Engagement

Sometimes, your business needs an external touch—which is the case for partnerships and collaborations. You can form strategic partnerships with other businesses that can introduce your product to new audiences. You should look for partners where your product adds value to their offering and vice versa, creating a win-win scenario for both parties and their customers. 

Steps to Cultivate Successful Partnerships and Collaborations

To find partnership and collaboration opportunities and bring them to life, you should: 

• Identify potential partners
• Reach out and build relationships by attending events 
• Engaging with potential partners via social media
• Sign up for partner collaboration tools to search for and communicate with partners

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Subscribe to a guild of world-class designers ready to join your team. Schedule a call with us today to learn more. 

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