What is Customer Engagement Score? How to Measure it?

Did you know that your customer engagement score can predict churn and indicate overall product health? Simply put the CES metric is one of the best churn predictors, because the correlation between churn and engagement is high.

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Customer engagement is indeed one of the most important factors in ensuring your SaaS business’ success. Gallup research says that a successful engagement of customers contributes to 23% of the revenue increase in businesses.

As customer engagement is crucial for business success, it is equally important how to measure it and this is where the customer engagement score metric comes in. CES is a crucial tool in the arsenal of any SaaS business as it helps monitor the health of the customer base and identify potential opportunities for growth while also providing clarity when developing marketing strategies.

Let us comprehensively discuss the definition of customer engagement score, its importance, and steps to calculate it.

Table of Content

1 What is the Customer Engagement Score (CES)?
2 Benefits of Customer Engagement Score
3 How to Measure Customer Engagement Score: 5 Steps
4 Customer Engagement Metrics
5 Use Cases of Customer Engagement Score
6 Create Product Stickiness with Customer Engagement Score
7 FAQs on Customer Engagement Score (CES)

What is the Customer Engagement Score (CES)?

A customer engagement score (CES) is a metric used by businesses to measure the level of customer engagement with their product or service. It is usually a score out of a hundred and is based on factors such as user activity, frequency of use, customer retention and customer feedback.

In the SaaS business model, tracking customer engagement is crucial for identifying disengaged users and preventing churn. Customer engagement strategies can be tailored based on the CES to improve customer retention rates and increase customer lifetime value.

Key objectives:

Measuring customer retention and satisfaction
Identifying areas for improvement in product offering and customer journey
Tracking the effectiveness of customer engagement strategies.

Benefits of Customer Engagement Score

The CES is especially important for SaaS companies where measuring user engagement is critical for success. The significance of customer engagement score (CES) cannot be overstated for businesses looking to improve their customer engagement levels.

Better cross-functional collaboration between product, marketing and customer success teams: By calculating CES, businesses can identify their most engaged customers and their unique journeys, which can help various departments collaborate to improve the overall customer experience.
Increase product stickiness: A high CES indicates that customers are spending more time using the app or product, which helps increase customer loyalty and decrease the churn rate.
Reduce customer churn: By actively monitoring customer engagement scores, businesses can quickly identify disengaged users and proactively find ways to win them back before they churn.
Increase trial to paid conversion rate: Measuring CES for freemium users will help businesses identify the ones that are most likely to convert.
Higher customer lifetime value (CLV): Understanding the level of engagement and providing a better customer experience leads to increased customer loyalty as well as higher CLV.

How to Measure Customer Engagement Score: 5 Steps

Customer engagement score (CES) measures the level of engagement that customers have with a company’s products/services. It is an important metric for businesses to track because it is directly tied to customer loyalty, retention and lifetime value.

Let us discuss a five-step process for measuring customer engagement score.

How to measure customer engagement score

Step 1: Define Your Customer Engagement Metrics

The first step in measuring CES is to define your user engagement metrics. These are the metrics that you will use to measure the level of engagement that your customers have with your company.
Some of the common user engagement metrics include

Active users: The number of users who have logged into your product or service in a given time period.
Engagement rates: The percentage of users who have interacted with your product or service in a given time period.
Customer satisfaction score: The score that customers give your product or service after using it.
Churn rate: The percentage of customers who have stopped using your product or service in a given time period.
Customer lifetime value (CLTV): The total value that a customer brings to your business over their lifetime.

Defining the metrics and KPIs helps you assess the level of engagement customers have with your business.
Best practices:

Identify the relevant user engagement metrics for your business
Set specific goals for each metric – what do you want to achieve?
Use tools such as Google Analytics or customer feedback surveys to track these metrics.

Step 2: Determine Your Time Period

The next step in measuring customer engagement score is to determine your time period. The time period you choose should be long enough to capture fluctuations in customer engagement, but not so long that it becomes difficult to interpret the results.
Common time periods include monthly, quarterly and annually.
Best practices:

Choose a time period that is appropriate for your business and the customer engagement metrics you have chosen.
Make sure that your time period is consistent across all user engagement metrics.
Use tools such as Excel or customer engagement software to track and analyze data.

Step 3: Create a Scoring System

Then comes to create a scoring system. It is a way of assigning scores to each customer engagement metric, which can then be used to calculate the overall customer engagement score.
For example, you might assign a score of 1-5 to the following customer engagement metrics:

Active users: 1 if 0-10% of users are active, 2 if 11-25% of users are active, 3 if 26-50% of users are active, 4 if 51-75% of users are active and 5 if 76-100% of users are active.
Engagement rates: 1 if 0-10% of users are engaged, 2 if 11-25% of users are engaged, 3 if 26-50% of users are engaged, 4 if 51-75% of users are engaged and 5 if 76-100% of users are engaged.
Customer satisfaction score: 1 if the score is 1-2 stars, 2 if the score is 3-4 stars and 3 if the score is 5 stars.
Churn rate: 1 if the churn rate is 0-10%, 2 if the churn rate is 11-25%, 3 if the churn rate is 26-50%, 4 if the churn rate is 51-75% and 5 if the churn rate is 76-100%.
Customer lifetime value: 1 if the customer lifetime value is low, 2 if it is medium and 3 if it is high.

Best practices:

Choose a scoring system that makes sense for your business and the user engagement metrics you have chosen.
Ensure that the scoring system is consistent across all customer engagement metrics.
Use tools such as Excel or customer engagement software to calculate the overall customer engagement score.

Step 4: Use Tools to Interpret Results

Moving ahead the next step will be to interpret the results. It is where you will take the data from your customer engagement metrics and analyze it to gain insights into how engaged your customers are.
Some tools that you can use to interpret the results include:

Customer engagement software: Software that is specifically designed to track and analyze customer engagement metrics.
Data visualization tools: Tools that can be used to create charts and graphs to make it easier to interpret the results.

Best practices:

Use the tools that make the most sense for your business and the user engagement metrics you have chosen.
Create visualizations that make it easy to understand the data.
Analyze the data to gain insights into how engaged your customers are and identify areas for improvement.

Step 5: Implement Changes

The final step in measuring CES is to take actionable steps based on the analysis. Once you have analyzed the data and identified areas for improvement, it is important to take action to improve customer engagement.
Some actions that you can take include:

Targeted communication: Reach out to customers with targeted messages based on their level of engagement.
Tailored recommendations: Offer tailored recommendations to customers based on their past behavior.
Customer success stories: Use customer success stories to show customers the benefits of using your product or service.
Product improvements: Use customer feedback to make improvements to your product or service.

Best practices:

Set specific goals for improving customer engagement based on the insights you have gained from the data.
Use a combination of the actions listed above to improve customer engagement.
Continuously track and measure user engagement metrics to see if your actions are having the desired effect.

Customer Engagement Metrics

User engagement metrics are essential for any business looking to measure and boost engagement. They help in measuring the level of engagement, identifying areas for improvement and implementing the necessary steps.

1. Weekly or Monthly Active Users

Weekly or Monthly Active Users refer to the number of users who have logged into an application within a week or month, respectively. By tracking this metric businesses can evaluate the engagement levels of their app, identify changes in customer behavior and tailor their offerings based on their needs.

2. Usage Frequency or Downloads:

Usage frequency is a measure of how frequently customers use the application or how many times the application is downloaded by users. It is especially important for mobile applications, where users’ time and attention are limited. Higher usage frequency indicates stronger customer engagement.

3. Adoption of Key Features

Adoption of key features tracks the percentage of users who have used the app’s key features that the business has identified to drive engagement. Businesses can use this metric to identify which features are being commonly used and what needs improvement. By learning the more used features, businesses can focus their efforts on improving the customer experience.

4. Time Spent Inside App

The metric is used to measure how much time users are spending in the application. The higher the time spent, the higher the customer engagement level. The metric helps in identifying the users finding value in it. Monitoring this metric helps to find ways to improve the experience to spend more time on their application.

5. Purchase Intent Signals

The purchase intent signals metric involves monitoring customer behavior that indicates their willingness to purchase a product, such as adding items to their cart or filling out a form to receive more information. It helps businesses understand customer’s intentions to purchase and allows them to tailor their marketing efforts accordingly.

Use Cases of Customer Engagement Score

The Customer Engagement Score is calculated using multiple metrics and helps businesses understand how well they are connecting with their audience.

Here are some use cases of CES and their importance:

1. Convert Visitors into Engaged Customers

The customer engagement score is used to convert visitors into engaged customers. By tracking metrics like usage frequency, downloads as well as time spent inside the app, businesses can understand how interested and engaged their audience is.

Analyzing the data businesses can design targeted campaigns to engage with their audience and entice them to take action. A higher engagement score indicates that customers are interacting with the business and are more likely to convert into paying customers.

2. Prevent Churning Customers

Businesses need to retain their customers to sustain themselves in the long run. Metrics like customer retention, customer satisfaction scores and customer feedback can give businesses insights into how to meet client’s expectations.

A low engagement score may indicate that the business needs to optimize its strategy to retain customers. By keeping a close eye on the customer engagement score, businesses can proactively prevent churning customers and retain their existing base.

3. Upsell and Cross-Sell Products

Customer engagement score also helps businesses in identifying opportunities for upselling and cross-selling their products. By tracking metrics like purchase intent signals, key events and user behavior, businesses can gain a deep understanding of their customer’s preferences.

Businesses can then design personalized campaigns that promote relevant products. A higher engagement score suggests that customers are more likely to be interested in complementary products/services being offered.

4. Improve Customer Retention

Customer engagement score is also an essential tool for improving customer retention. Metrics like customer satisfaction scores, customer effort scores and customer feedback can give businesses insights into customer experience.

Thoroughly analyzing the data regularly, businesses can identify pain points, optimize their strategy and make necessary changes to improve the overall client experience. A higher engagement score suggests that customers are satisfied and have a positive perception of the business leading to higher retention rates.

5. Identify Potential Advocates

Customer advocacy is key to maintaining a flourishing business. A high engagement score indicates that customers are actively engaged with the business and are likely to spread positive word of mouth.

By tracking metrics like customer loyalty, power users and satisfied customers businesses can identify potential advocates who are more likely to recommend their products or services. Encouraging such behavior can be an effective marketing strategy to acquire new customers.

Create Product Stickiness with Customer Engagement Score

The customer engagement score is a powerful tool to create product stickiness by understanding the needs of your customers. By tracking metrics like customer satisfaction and retention businesses can optimize their strategy to improve customer experience.

A higher engagement score indicates that customers are satisfied and engaged with the business making it more likely for them to stick around. By identifying potential advocates among satisfied customers, businesses can leverage customer advocacy as a marketing strategy to acquire and retain customers.

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Neeti Singh

FAQs on Customer Engagement Score (CES)

1. How is the customer engagement score calculated?

The customer engagement score is calculated using a variety of metrics and analytics tools. Some of the common metrics used include active users, customer retention rate, conversion rate, customer satisfaction scores and user engagement rates. These metrics are combined and weighted appropriately to arrive at a final score.

2. What are some key takeaways from the customer engagement score?

One key takeaway from the customer engagement score is that engaged customers are more likely to be loyal to your brand and promote your product through word of mouth. Another takeaway is that tracking customer engagement allows you to identify areas of improvement in your product or service and make informed decisions to enhance the customer experience.

3. Can the customer engagement score help measure the success of my business?

Yes, the customer engagement score is one of the key metrics used to measure the success of a business. A high engagement score indicates that customers are satisfied, engaged and more likely to remain loyal to your brand, which in turn can lead to increased revenue.

4. What are the different customer engagement strategies used to improve the engagement score?

Some of the common customer engagement strategies include improving the product or service experience, soliciting customer feedback through surveys and other methods, providing personalized customer support as well as creating customer loyalty programs. It is important to continually review and optimize these strategies to ensure they are effective in improving the customer engagement score.

5. What is the benefit of tracking customer engagement scores for my sales team?

Tracking the customer engagement score can benefit your sales team by providing them with valuable insights into customer behavior, preferences, and how they interact with your product or service. This can help your sales team to tailor their approach and messaging to better meet the needs of potential customers, improving their chances of closing deals as well as driving revenue for your business.