Customer engagement has been a key focus in marketing since the mid-2000s. It represents the quality and depth of the relationship between customers and businesses. While the term might seem straightforward, customer engagement goes beyond frequent product or service usage. Marketers define it as a positive connection where customers find value, stay loyal, and even advocate for the brand.
However, customer engagement is not a single metric. Instead, it’s assessed using various criteria that differ depending on the product or service. Keep reading to learn how to measure customer engagement and which metrics to track for your business success.
Why are Customer Engagement Metrics Crucial for Your Business?
Measuring customer engagement is crucial, as engaged customers tend to stay loyal, spend more, and advocate for your brand. Analyzing these metrics offers valuable insights into your brand's performance and uncovers areas for growth and optimization.
Additionally, if you track customer engagement metrics, you can identify which aspects of your offerings resonate most with your customers. On the flip side, understanding where engagement drops off reveals areas where customers lose interest, allowing you to take action to address these gaps.
Let’s explore the essential metrics for measuring customer engagement, along with examples of industries where they are commonly used.
15 Key Customer Engagement Metrics to Track
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Active Users (DAU/MAU)
The number of users actively engaging with your product or service is one of the basic metrics for customer engagement. Businesses often measure Daily Active Users (DAU) and Monthly Active Users (MAU) to monitor engagement trends.
MAU and DAU are primary metrics for SaaS businesses, social media platforms, online gaming companies, and marketplaces. They matter, as growing active user counts generally indicate increasing engagement and customer interest.
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Churn Rate
This metric measures the percentage of customers who stop using a product during a given time. A healthy churn rate varies depending on the product or service but is generally between 5% and 10% annually for SaaS companies. ecommerce businesses might aim for a churn rate below 20% annually.
Formula:
By investing time into churn analysis, most online businesses can implement strategies to improve customer satisfaction.
Real-world application
A food delivery service relied heavily on these metrics to guide business decisions. When they detected that a user had not opened the app for seven days, they triggered re-engagement efforts. They also analyzed users using a combination of metrics:
- Monitoring DAU/MAU patterns helped identify early warning signs of disengagement.
- Rather than waiting for complete customer loss, they treated behaviors like not opening the app for a week as potential pre-churn signals.
- When customers showed signs of churning, they were asked to rate their last order. This data was used to address issues before losing the customer completely.
This proactive approach significantly increased the number of repeat customers.
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Customer Lifetime Value (LTV)
LTV predicts the total revenue a customer is expected to bring to your business over the course of their relationship with you. This metric shows the average revenue a company can expect from an individual customer over time.
You can use one of the few existing formulas or use the CLV calculator to determine LTV.
Formula:
Average Revenue Per User (ARPU) is the average revenue earned from each user during a specific time.
LTV is one of the key metrics for companies with a business model that relies on customer retention and repeated purchases. However, other businesses seeking to maximize customer relationships can also benefit from using it.
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Customer Retention Rate (CRR)
This metric measures the percentage of customers who continue to use your products or services over a specific period.
Formula:
A good retention rate often depends on the industry. For subscription-based businesses, a retention rate exceeding 85% is generally considered as excellent. In ecommerce, a typical benchmark is 20-30% is typical, though achieving higher rates demonstrates stronger customer loyalty and a deeper connection with the brand.
Real-world application
The Stylus.ua case study illustrates how together with Yespo CDP companies can improve customer retention through systematic approaches:
- They implemented a three-part welcome email series for new customers, increasing revenue from this channel by 150%, demonstrating the impact of early engagement on retention.
- When customers showed signs of disengagement, they used reactivation campaigns with personalized discounts and surveys, successfully re-engaging 5% of inactive customers.
- They reduced unsubscribe rates by 20% by introducing an "unsubscribe rescue" page offering personalized incentives to stay.
- Their comprehensive retention strategy, combining segmentation, personalization, and engagement campaigns, resulted in a 30% increase in active subscribers.
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Feature Adoption Rate
This metric measures how quickly and widely users adopt a new feature. It helps evaluate the success of new features and their relevance to users.
Formula:
In SaaS businesses, where feature rollouts are frequent, tracking how quickly and consistently users adopt new features helps product teams understand which updates improve user experience and which may miss the mark. This approach can also benefit ecommerce businesses with a strong digital presence and interactive features.
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Customer Satisfaction Score (CSAT)
CSAT captures customer happiness and immediate feedback following interactions. This metric, along with other user engagement metrics, evaluates how well your product or service meets customer expectations.
CSAT is typically collected through brief surveys that capture real-time feedback following a customer interaction. These surveys prompt customers to rate their satisfaction on a scale—commonly ranging from 1 to 5 or 1 to 10—where higher numbers reflect a greater level of contentment.
Formula:
Service-oriented industries like retail and SaaS frequently rely on CSAT, as customer interactions play a crucial role in driving loyalty.
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Net Promoter Score (NPS)
NPS measures customer loyalty by asking: "How likely are you to recommend this product to others?” Responses are scored on a scale from 0 to 10 and divided into three categories:
- Detractors (0-6): Dissatisfied customers who could potentially harm your brand’s reputation.
- Passives (7-8): Neutral customers with little impact on your growth.
- Promoters (9-10) Enthusiastic customers who drive referrals.
To calculate NPS, subtract the percentage of Detractors from Promoters. A high NPS signifies a loyal customer base likely to generate positive word-of-mouth and contribute to sustained growth.
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Customer Effort Score (CES)
CES evaluates how easy it is for customers to achieve their goals when interacting with your product. This is usually assessed via a simple survey question, such as, "On a scale of 1 to 5, how easy was it to resolve your issue?"
CES helps businesses pinpoint friction points that may hinder satisfaction. Lower scores suggest challenges, which can lead to dissatisfaction, while higher scores indicate a smoother, more positive experience.
By tracking CES, businesses can identify pain points, ultimately improving customer engagement.
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Engagement Rate
Engagement rate measures how often customers interact with your content, such as emails, social media posts, or product updates. This is calculated by dividing total interactions (e.g., likes, shares, comments, clicks) by the total reach or impressions and is expressed as a percentage. A higher engagement rate reflects that your audience finds your content relevant, which can increase customer loyalty and boost customer retention.
Businesses focused on content and email marketing rely on this metric to fine-tune their strategies, ensuring their messaging aligns with customer preferences.
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Conversion Rate
Conversion Rate represents the percentage of users who complete a desired action, such as signing up, making a purchase, or downloading content. It’s calculated using the formula:
Conversion Rate is essential for any business, as it evaluates the effectiveness of your campaign objectives in terms of turning prospects into customers.
Real-world application
The DeepStateMap case study demonstrates how different approaches can dramatically affect conversion rates:
- Their news signup widget saw conversion rates jump from 0.37% to 1.44% (a 3.9x increase) by implementing mobile-adaptive popups and optimizing load times.
- Their donation widget achieved a modest improvement from 0.59% to 0.60% using a floating bar design.
- Their targeted content widget showed the most dramatic improvement, increasing from 1.44% to 46.9% through geo-specific content blocking.
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Time on Site or App
This metric tracks how long users stay engaged on your website or app, offering into the value they perceive in your offerings. When users spend more time on a website or app, it often signals that they find the content engaging and relevant. Conversely, shorter visits may indicate areas where user experience or content quality could be improved to better meet their expectations.
Tracking this metric helps businesses optimize their platforms to enhance digital customer engagement and retention.
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Click-through Rate (CTR)
Click-through Rate is one of the key customer engagement metrics tied to content performance. It measures the percentage of users who click on a link within your emails or ads. A higher CTR suggests that your content is engaging and effectively prompts further interaction from your audience.
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Bounce Rate
indicates the percentage of visitors who exit your site after viewing only a single page. A high bounce rate might indicate that your content didn’t align with user expectations or that visitors struggled to find what they were seeking. Analyzing bounce rates can help refine landing pages or content strategies to retain visitors.
Real-world application
The MustHave case study shows how strategic user engagement can improve bounce rates:
- By implementing informer widgets at key decision points on their ecommerce site, they reduced their abandonment (bounce) rate by 6.44%
- Their success came from addressing specific user needs at critical moments, such as providing product length options when customers viewed items and offering size availability information during the shopping process
- This targeted approach, combined with internal linking widgets on high-bounce pages, helped guide users to relevant content instead of letting them leave
- Their efforts to reduce bounce rates were part of a larger engagement strategy that also increased page visits by 10.2% and unique views by 12.6%
This case shows how addressing user pain points with timely, relevant information can significantly improve bounce rates while enhancing overall site engagement.
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Social Media Engagement (Likes, Shares, Comments)
If your business relies on social media as a marketing channel, tracking interactions like likes, shares, and comments is crucial. Strong engagement indicates that your content resonates with the audience, helping to build a sense of connection and community around your brand.
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Customer Advocacy Rate
Customer Advocacy Rate measures how often customers promote your brand, such as through reviews, testimonials, or user-generated content. This metric is often gathered via surveys or referral programs and highlights the strength of your customer relationships.
Boost Customer Engagement Metrics with Yespo
Whatever customer engagement metrics are worth tracking for your specific business, basing decisions on accurate data is critical. This is where Yespo, an omnichannel customer data platform, can help.
Yespo is a platform with a range of features designed to help businesses increase customer engagement. Here are a few of them:
- Consolidated customer data: Get a 360-degree view of each customer by unifying data from multiple channels and conducting customer engagement analytics.
- Omnichannel campaigns: Coordinate seamlessly across email, SMS, push notifications, and other channels to improve user experience.
- Automation: Create personalized customer journeys triggered by user actions, driving more timely and relevant interactions.
- Segmentation: Use real-time and predictive segmentation to anticipate customer needs and deliver personalized communication.
Yespo’s tools integrate data, automation, and deep customer segmentation to help businesses enhance engagement and drive results.
Final Thoughts
There is no one-size-fits-all set of customer engagement metrics. Every business operates with unique customer engagement KPIs, based on their user behaviors and industry standards. Equally important are the channels used to achieve marketing and sales goals. The key is to prioritize metrics that align with your industry and audience behavior.
In ecommerce, customer engagement metrics like Lifetime Value (LTV) highlight a customer’s revenue potential, while Retention Rate and Churn Rate offer valuable insights into customer loyalty and areas where your strategy can be refined. User engagement metrics like NPS and CSAT can uncover how customers perceive your brand and identify opportunities to enhance the experience. Tracking the right metrics and leveraging tools like Yespo ensures informed decision-making and more effective strategies.